August slowdown hits Bay Area housing market after red-hot year

After a red-hot start to the year, the Bay Area’s housing market is heading toward a fall and winter hibernation that should be easier for buyers battered by frenzied competition for a scant supply of homes for sale.

“We’re edging back to normalcy,” said Andrew LePage of CoreLogic DataQuick.

This year’s big annual price gains came early, with February recording a 30 percent yearly gain for Bay Area single-family homes; March, 28.7 percent; and April 17, percent, as homebuyers strove to outbid one another for the few homes on the market. Price gains began leveling off in June and July. And August continued the trend, with slowing sales and more moderate sales price gains — especially in the South Bay — the real estate information service CoreLogic DataQuick reported Thursday.

 August slowdown hits Bay Area housing market after red hot year

In August, the median sale price of a single-family home in the nine-county Bay Area was up 10.5 percent to $650,000 from a year earlier. That compares with a 35.2 percent year-over-year price gain in August of last year, according to the Irvine-based company.

LePage said trends show there are fewer investors competing with regular buyers, and banks are making more loans that are over the so-called “conforming jumbo” limit of $417,000, which can carry lower interest rates and are vital to buyers in the high-cost Bay Area.

Prices were up the most in Alameda County, where they rose 17.3 percent to $668,500.

Smaller gains were reported elsewhere. Prices were up 9.9 percent to $478,000 in Contra Costa County; up 6.1 percent to $790,000 in Santa Clara County; and up 4.2 percent to $904,000 in San Mateo County. That compares with last August’s year-over-year gains of 32 percent in Alameda County, 39.4 percent in Contra Costa County, 24 percent in Santa Clara County and 33.5 percent in San Mateo.

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Alameda County is essentially back to its pre-crash peak set in 2007, according to CoreLogic DataQuick, while Santa Clara and San Mateo counties have already surpassed their former peaks. Contra Costa County still has a way to go — it’s still nearly 27 percent below its high.

Some real estate agents in the East Bay said they were beginning to see price reductions as sellers realize they have missed the big buying season.

Sales of single-family homes were down 8.1 percent in the nine-county Bay Area in August, compared with a mere 3.2 percent year-over-year drop in August 2013, CoreLogic DataQuick said. Santa Clara County sales sagged 15.7 percent and Alameda County sales dropped by 12.2 percent from last August. Defying that trend, Contra Costa County had a 4.2 percent gain and San Mateo County sales rose 4.5 percent over the year.

Raj Singh, a software marketing consultant, and his wife, Sarita, hit the market with perfect timing in their search for a home for their growing family.

First, they sold their Pleasanton condo at their asking price of $875,000 in two days in July. Then, after several weeks of looking, they noticed the market was slowing down.

“By the second or third week we could see people were flexible on the pricing,” he said. Eventually, they paid $1.7 million for a Pleasanton house originally listed for $1.89 million.

“I sold at list price and bought at a discounted price,” he said. “It all happened within a 45-day time frame.”

August was definitely kinder than July to Peggy Huston, a UC Berkeley project manager who began looking for a home early in the year.

“Between the time I first started looking at the beginning of the year and July, it seemed like it was just getting faster and faster and faster,” she said this week, as she was closing on a home in Martinez. A house she liked in July was snapped up before she could even make an offer.

Then, just as Huston was about to leave on a weeklong vacation, her agent called to tell her about another house.

Surprisingly, it was still available when she returned.

“I don’t know if I was the only one left in town and everybody else had left on vacation, or it was just meant to be. It had been on the market for two weeks, and it was a completely different market than my experience until then.”

Her agent, Laura Wucher with Better Homes and Gardens Real Estate, said she’s seeing more homes being listed just as the market is slowing. “A lot of people have listed their houses too late, and it’s taking a lot longer to get offers,” she said.

Jennifer Branchini, president of the Bay East Association of Realtors, said she’s seeing more houses with “price reduced” on them.

“When I see seven to 10 price reductions in a day, I think it’s a sign the market’s calming down” in the East Bay’s Tri-Valley area, Branchini said.

But the parts of the East Bay closest to San Francisco are still sizzling, said Cameron Platt of Platt Real Estate in Oakland. “We’ve seen it kind of start to slow down in terms of the volume of offers, but we’ve had multiple offers on just about every listing. There’s still a hell of a lot of demand out there.”

A persistently low number of homes for sale in Silicon Valley has Chris Trapani of Sereno Group predicting another jump in prices early next year. “We’ll have fewer properties for sale in January, and if the demand is equal, it’s hard to argue that we won’t see some more price appreciation,” he said.

While the home-buying season peaks at the end of June “just like clockwork,” added Michael Simonsen, CEO of Altos Research, “we don’t see bearish signs in demand” in Silicon Valley’s future.

Contact Pete Carey at 408-920-5419. Follow him on Twitter.com/petecarey.

Article source: http://www.mercurynews.com/business/ci_26514018/august-slowdown-hits-bay-area-housing-market

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