According to this article in yesterday’s SF Chronicle, last August home sales sank to their lowest point in 15 years, hitting a level this housing market has not seen since 1992. Within the nine county region this article covered, the further out you go, the more pronounced is the drop in sales. Altogether, the number of home sales dived 25% in August compared with a year prior. In August 2006, 9,713 homes and condos were sold; that number only reached 7,299 last month.
To throw more salt in the already deep wound and make it really hurt, mortgage defaults are rising and the credit crunch is making it beyond difficult to securing financing for those who want to get into the market. With the median bay area home price at $655,000 (according to chart on the right, but much higher in other counties like SF, San Mateo and Marin), the majority of bay area potential buyers would most likely be looking towards jumbo mortgages. With the current mortgage and credit situation, some providers have cut off their lending in the jumbo space and for those who haven’t, it’s gotten much more expensive to borrow more than a conventional, conforming loan that tops off at $417,000. Potential buyers (like me) may wait it out until the jumbo rates drop back down to a more”normal” level and not bite off more than we can chew…just reading about all the subprime mess hopefully has taught all of us that. Even with a short sale, the higher rates may just negate the savings from a drop in the price from a home that’s been hanging out too long, as you’ll be paying more than ever in interest.
The chart on the right, is a county by county breakdown of homes sold in the bay area from the front page of SF Chronicle’s business section. If you are interested in what others have to say about the state of the market and their comments on this article, check out these responses.