the visible hand

it is the theory which decides what can be observed – einstein

Bay Area home prices plunge to 53-month low

Posted by ecoshift on August 19, 2008

Home prices plunge; foreclosures boost sales
Carolyn Said, Chronicle Staff Writer
Tuesday, August 19, 2008

SAN FRANCISCO — Bay Area home prices plunged to a 53-month low in July as a brisk business in foreclosed properties depressed prices and buoyed sales volume, according to a real estate report released Tuesday.

The median price for both new and resale homes and condos stood at $470,000, down 29.3 percent from a year ago, according to MDA DataQuick of San Diego. The last time the median was lower was in March 2005, when it was $469,500. For resale homes, the median was $485,000, a 34.3 percent drop from last July.

A full 33 percent of all resale homes were foreclosed properties, which banks generally sell at a discount – further depressing prices in the vicinity. In July 2007, just 4.2 percent of existing home sales were foreclosed properties.

The highest percentage of foreclosed sales was in Solano County, where two-thirds of all resold homes were foreclosures. The lowest was in San Francisco at 4.6 percent of existing-home sales.

A total of 7,586 new and resale houses and condos changed hands in the nine-county region in July, up 2.2 percent from a year ago. For resale homes, a total of 5,585 sold, up 11.9 percent from a year ago.

DataQuick cautioned that the increase in sales was not a harbinger of market recovery.

“So much of today’s market is driven by distress,” said John Walsh, MDA DataQuick president. “Unless interpreted in that context, the stats give a rather distorted view of the overall market. We know one-third of the Bay Area’s resales in July were homes fresh off foreclosure. Who knows how many more involved a desperate seller and a lender who accepted a short sale?”

The foreclosure flood is good news for home buyers who are able to meet today’s strict qualifications for getting a mortgage. But many buyers are still taking a wait-and-see attitude since prices are continuing to drop. And among sellers, those who are not under duress continue to stay on the sidelines.

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