Bay Area House-Price Appreciation Rises as Market Activity Plunges in the Fourth Quarter

Posted by Elli Karagiorgas — January 23, 2008

PLEASANTON, Calif. – (Jan. 24, 2008) – Reacting to the country’s liquidity crisis, housing market activity in the Bay Area continued on a downward slide in the fourth quarter of 2007, as all housing types experienced dramatic decreases in unit sales – down 39 percent, year-over-year – according to report released today by the research division of Prudential California Realty based on an analysis of MLS data. However, the region-wide decline in activity levels had little effect on median house price appreciation, as both detached homes and condominiums experienced a seven and eight percent increase, respectively.“Steady activity in high-end Bay Area markets induced a significant increase in prices this quarter, while entry-level markets were characterized by a dramatic reduction in sales,” said Scott Kucirek, general manager of Prudential California Realty, based in Pleasanton. “Looking forward, the next two quarters could remain challenging, as high-end buyers may take a ‘wait-and-see’ approach, while financing options will remain limited for those seeking entry-level homes.”Fourth Quarter 2007 Bay Area Market SummaryHousing TypeMedian Price**Home SalesQ407Q406% ChangeQ407Q406% ChangeSingle-Family Detached Homes$785,058$735,295+76,96711,503-39Single-Family Attached Homes$527,859$490,554+81,6722,540-34Housing TypeAverage Days on Market*Active Listings+Q407Q406Difference (Days)Q407Q406% ChangeSingle-Family Detached Homes7058+1244,13239,844+11Single-Family Attached Homes7162+88,6868,611+1Of the Bay Area markets surveyed, Marin and Santa Clara County yielded the highest year-over-year price appreciation, rising 13 and 11 percent, respectively. San Francisco and San Mateo, two areas brimming with job opportunities, also showed noticeable price gains, up 10 and nine percent, respectively, from the same period last year.Meanwhile, other counties in the region comprising a larger number of entry-level and mid-range markets had fewer interested or qualified buyers, despite the availability of affordable properties; Solano County, in particular, suffered a 48 percent decrease in market activity, year-over-year.Market activity remained unpredictable in some counties in the fourth quarter, as reduced unit sales and higher median prices forced some Bay Area buyers to wait for an improvement in market conditions. Qualified buyers in these counties favored properties in well-appointed neighborhoods, resulting in particularly strong sales-to-price disparities in Los Gatos, Palo Alto and Sunnyvale (Santa Clara County) and Burlingame, Portola Valley and Redwood City (San Mateo County) for single-family detached homes. Sellers in mid-range and high-end communities who did not receive their asking price tended to retract from the market. At the same time, entry-level communities in these same counties consisted of many sellers who were on the market due to a pressing need, such as foreclosure.Added Kucirek: “The Bay Area real estate market still presents many questions as we move into 2008. Market activity may decrease slightly in conjunction with a mild price adjustment later this year, although entry-level markets hit hardest over the last two years may again look attractive to both first-time buyers and investors.”Survey of Bay Area Counties – Median Prices – Fourth Quarter 2007CountySingle-Family Detached HomesSingle-Family Attached HomesQ407Q406% ChangeQ407Q406% ChangeAlameda$638,569$635,101+1$376,901$415,572-9Contra Costa$597,736$639,396-7$305,779$347,796-12Marin$1,045,331$967,286+8$663,934$546,475+22Napa$604,500$610,000-1$399,999$425,000-6San Francisco$1,080,335$970,548+11$799,559$744,420+7San Mateo$1,133,184$998,199+14$499,408$496,812+1Santa Clara$942,782$853,559+11$487,846$438,207+11Solano$384,626$457,415-16$234,778$293,420-20Sonoma$521,441$563,023-7$320,242$349,248-8Bay Area$785,058$735,295+7$527,859$490,554+8Survey of Bay Area Counties – Unit Sales – Fourth Quarter 2007CountySingle-Family Detached HomesSingle-Family Attached HomesQ407Q406% ChangeQ407Q406% ChangeAlameda1,3962,471-44249398-37Contra Costa1,1992,158-44220320-31Marin357498-2890138-35Napa116187-381532-53San Francisco547701-22473548-14San Mateo7771,091-29140266-47Santa Clara1,5722,604-40342594-42Solano427837-495495-43Sonoma576956-4089149-40Bay Area6,96711,503-391,6722,540-34* Days on market is the number of days a property was listed on the market until it went under contract at its final listing price. This is may not reflect previous listings.**The median home price for the entire region is the weighted mean of median home prices of cities within the San Francisco Bay Area.+ Active listings is the sum of listings that were available for sale for at least one day within the quarter. This can include listings from previous quarters.Data are sourced from multiple listing services and are deemed reliable but not guaranteed.All percentages rounded to nearest whole number.Bay Area refers to sales within Alameda County, Contra Costa County, Marin County, Napa County, San Francisco County, San Mateo County, Santa Clara County, Solano County and Sonoma County.About Prudential California RealtyFounded in 1887 as Mason-McDuffie Real Estate and transitioning to the Prudential name in 1997, Prudential California Realty (PCR) and its sister affiliations in Nevada and Texas are a leading innovator of real estate technology solutions to its agents and clients. Now the 8th largest national real estate brokerage among companies using settlement services, Prudential CA/NV/TX provides comprehensive real estate solutions when buying, selling and owning a home with more than 11,000 transactions and $5.4 billion in annual sales for 2006. The company offers consumers full MLS access to home listings through its website www.PruRealty.com.

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