According to MLS: Greater Bay Area Housing Market News

Greater Bay Area Housing Market Report

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For economists, poor jobs and housing data indicate a slowing economic recovery. For homebuyers, the news means lower prices and better mortgage interest rates. As of June 2011, qualified homebuyers - those with excellent credit and with funds available for down payments – couldn’t be in a better position to buy a home.

Prices are at their lowest since 2002, according to the Q-1 2011 S&P/Case-Shiller Index. Since 2006, prices have fallen 33%, greater than the 31% decline recorded during the Great Depression. According to the National Association of REALTORS, the national median existing-home price for all housing types was $163,700 in April, 5.0 percent lower than in April 2010. Distressed homes, which sell at a discount of approximately 20%, were 37% of sales, up from 33% a year ago.

Believe it or not, there’s good news hidden in the numbers. Analysts at Capital Economics say housing has actually overcorrected, and is undervalued by approximately 24%. Paul Dales, U.S. analyst, reports that currently U.S. housing is undervalued by approximately 24%, the lowest amount in 35 years. For that reason, he predicts that the housing slide is nearing its end. Foreclosures, which have pressured both prices and real estate appraisals for non-distressed homes, are still high -- but are leveling off. RealtyTrac says that U.S. foreclosure filings were down 9% in April 2011 from March, and down 34% from a year ago.

It takes confidence to buy a home. On June 3, 2011, the government reported that the jobless rate rose from 9.0% to 9.1%, a reversal of three months of earlier gains, which is likely to continue to keep the distressed home pipeline full for months to come. The news has sent mortgage interest rates plummeting. After a seven-week slide, the Freddie Mac survey announced on June 3, 2011 that the benchmark 30-year fixed-rate mortgage averaged 4.55%, down from 4.60% the prior week and 4.79% a year ago.

California
Like the rest of the nation, California home sales also declined in April 2011 from the previous month, but were up 5% over a year ago. And, unlike the national trend, home prices actually increased. The statewide median price of an existing, single-family detached home sold in California rose 2.5 percent in April to $293,570, up from a revised $286,510 in March, says the California Association of REALTORS (C.A.R.).

The combination of an average 4.8% fixed-rate plus prices well below the peak of 2006, point to improved housing affordability. The percentage of buyers who could afford to buy the median-priced, single-family home rose to 53% in Q1-2011, up from 50% in Q4 2010, according to C.A.R.’s Traditional Housing Affordability Index (HAI). All eyes are on the White House proposal to eliminate Fannie Mae and Freddie Mac and to reduce the high-cost-area conforming loan limit from the temporary $729,750 to a permanent $625,500. It’s unknown whether or not the pending rule will temporarily boost housing sales in high-cost areas such as the Greater Bay Area, as buyers try to close their loans before the temporary ceiling is removed at the end of September 2011.

Local Sales Trends – May 2011
Locally, according to MLSListings May 2011 County Indicators Report, home sales and inventory figures mirrored elements of both the regional and national pictures, but this market appears to be charting its own course. While overall performance in Monterey, Santa Clara, San Mateo, San Benito and Santa Cruz counties fell compared to the same time last year, month-over-month changes are indicating some positive signs.

Closed sales in May dropped in four of the five counties from the same month last year. Santa Clara County had the largest drop at 21%, while San Mateo and Monterey each dropped by 15%. San Benito sales were down 8%, and San Mateo remained flat.

Compared to last month, sales increased 15% in San Mateo County, 4% in both Monterey and San Benito, dropped 3% in Santa Clara and remained flat in Santa Cruz.

Inventory increased or remained flat from the same month last year in all five counties except Monterey and Santa Cruz, where they were down 6% and 4% respectively. San Benito inventory was up 6%, San Mateo up 1%, while Santa Clara remained flat.

Compared to last month, inventory increased or remained flat in all counties. Inventory was up 8% in Santa Cruz, 4% in Monterey, 3% in San Mateo, and remained flat in both San Benito and Santa Clara.

New Listings compared to the same month last year dropped 15% in Monterey, 1% in Santa Clara, but increased 18% in San Benito, 2% in Santa Cruz, and just 1% in San Mateo.

Compared to last month, listings were up 18% in Santa Cruz, 8% in Monterey, 1% in both San Benito and Santa Clara, and decreased 4% in San Mateo.

Median Price dropped in four of the five counties compared to the same month last year. The largest drop occurred in Santa Cruz at 16%, San Benito was down 6%, Monterey down 5%, Santa Clara down 4%, and San Mateo showed the only increase at 10%.

Compared to last month, coupled with strong sales, San Mateo’s median price rose 14%, San Benito was up 6%, Santa Clara up 3%, while Monterey dropped 3% along with Santa Cruz which was down 2%.

Days on Market increased substantially from the same month last year in all counties except in Santa Cruz. DOM increased 84% in San Benito, 49% in San Mateo, 32% in Santa Clara, 13% in Monterey, and dropped 15% in Santa Cruz.

Compared to last month, days on market increased 35% in San Benito and 6% in San Mateo. DOM dropped 24% in Santa Cruz, 14% in Santa Clara, and 3% in Monterey.