Mark's Notebook


	If you believe everything you read, better not read. - Japanese Proverb

Home sales falter, hinting at slowdown

San Francisco Chronicle

Friday 17 February 2006, 12:57 pm
Keywords: News Articles

by Kelly Zito, Chronicle Staff Writer

Bay Area home sales tumbled to their lowest level in five years last month, and prices hovered well below record territory, further evidence that the region's seemingly unstoppable housing boom may have peaked with the blistering market of 2005.

January's performance is the latest sign of a cool-off that began 10 months ago when sales counts began declining. Experts have attributed the loss of steam to higher interest rates, prices climbing beyond the reach of many consumers and the inevitable maturing of the decade-old housing boom.

Last month, nearly 36 percent fewer houses and condos sold in the nine-county region in January compared with December and 20 percent fewer compared with January 2005, real estate information firm DataQuick reported Thursday. The month's total was 6,004; it usually ranges between 4,000 and 7,500.

Prices, while still up notably on a year-to-year basis, fell below autumn peaks. The median for a single-family home stood at $628,000, up 13 percent from last January, but 4 percent under November's $656,000. The condo median hit $475,000, up from $410,000 last January but below the October record of $490,000.

Clearly, the market is shifting to a lower gear as real estate agents report fewer bidding wars and a jump in the number of properties for sale. But housing experts are divided on how long the respite will last and whether 10 consecutive months of declining sales activity foreshadow falling -- or merely stalling -- prices.

For some hint of the Bay Area's trajectory, DataQuick analyst John Karevoll pointed to San Diego, which has been termed the "canary in the coal mine" by economists who have watched closely as that city's price growth rocketed north of 26 percent in late 2004. A short time later, sales totals plunged, and price appreciation has sunk to about 2.5 percent annually.

But other experts think the Bay Area's high-flying market is due for a steeper correction.

Real estate agents -- who are usually among the first to sense changes in the market -- say power is now balanced between buyers and sellers after several years of rampant multiple offers, waived inspections and pleading "sell me your house" letters.

That new rubric was summed up earlier this week at a sales meeting at Zephyr Real Estate in San Francisco. Of the 25 sales, 12 properties went for above the asking prices, 9 went for the asking price and 4 sold for below. Some agents say they must price their listings more realistically and market them aggressively.

Michael Carney, executive director of the Real Estate Research Council of Northern California at California State Polytechnic University at Pomona, theorizes that an initial softening market may only drive more buyers out of the woodwork, buoying prices and sales over the longer term. "People are saying we're going to have this collapse of the bubble, but I don't think we're going to have an enormous drop in home prices," Carney said. "One reason is that you have a whole lot of people out there hoping prices fall. Demand is still there somehow."

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