Buying ain’t easy. First prices soar, then they slow down, but rising interest rates make up the difference.

Blanca Torres
Reporter- San Francisco Business Times

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The rapid rise of home prices may be slowing, but too bad interest rates are now creeping up.

In the Bay Area, home prices are still growing, but not as fast, according to Trulia, the San Francisco-based online real estate marketplace.

The firm found that while home prices jumped 17.2 percent in the month of July compared with July 2012, price growth slowed down during the last six months. From January to March, prices rose by 6.5 percent and from April to June, they went up 3 percent.

“The biggest price slowdowns have come to some of the hottest local markets,” said Jed Kolko, Trulia’s chief economist. “California and Nevada remain the Wild West for asking home prices, with some of the sharpest drops during the bust, strongest rebounds over the past year, and now biggest slowdowns in the past quarter.”

Nationwide, asking home prices dropped slightly— 0.3 percent — in July compared with the previous month. It’s the first time since November 2012 that prices didn’t go up.

They are still up 11 percent for the month of July compared with the same month last year.

One major factor deflating home prices is rising interest rates during the past six months.

In the past couple of years, historically low interest rates boosted sales and skyrocketing price growth, but higher rates are now dampening the mood.

“Asking home prices are now starting to lose steam as mortgage rates rise, inventory expands and investor demand declines,” said Trulia in a recent market report.

A year ago, a buyer could afford to pay a higher asking price because interest rates were low. Now, buyers may end up paying the same per month, but more of their payment will go toward interest versus the principal value on the loan.

So even if prices level off or go down in the months to come, buying a home in the Bay Area will still be just as costly if not more.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/08/bay-area-home-price-growth-leveling-off.html

A total of 4,991 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 0.5% from 4,966 in January but down 0.9% from 5,035 in February 2010, according to DataQuick Information Systems. The San Diego firm tracks real estate trends nationally via public property records.

A small increase in sales between January and February is normal for the season, with that gain averaging 2.7% since 1988, when DataQuick’s statistics begin. Last month’s sales were 20.9% below the February average of 6,307 transactions.

Search for the best local mortgage rates at TheStreet’s sister site, BankingMyWay.

Just 243 newly built homes sold in the Bay Area in February, the least for any month in DataQuick’s statistics. The previous low was 253 in January this year. One of the main problems builders face is that they can’t compete with prices on resale homes, especially distressed properties.

Distressed sales – the combination of sales of foreclosed homes and “short sales” – accounted for just over half of the Bay Area’s resale market last month.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – made up 32.6% of the Bay Area’s resale market in February. That was down from 35.0% in January and 36.3% a year ago. Foreclosure resales peaked at 52.0% in February 2009. The monthly average for foreclosure resales over the past 15 years is about 9%.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 20.3% of Bay Area resales last month, a peak for the current real estate cycle. Last month’s short sale figure was up from an estimated 19.7% in January, 17.8% a year earlier, and 12.6% two years ago.

Article source: http://www.thestreet.com/story/11050412/1/investors-lead-san-francisco-home-sales.html