Fluctuations in Housing Market in Bay Area

In the 9 county San Francisco Bay Area, the fluctuations recorded in the housing market are worth watching, since they are the indicators for both sellers and home buyers. While home sales are up, the participation of foreclosure properties in home sales shows a downward trend.

The total home sales in March, in all the counties of the Bay Area, were recorded as 6,992 properties closing escrows. This shows an increase by 40.2 percent from the figure of February and again up by 10.5 percent from March 2009, when only 6,325 homes were sold. It is noteworthy that the Bay Area home sales have continued to record increase during February and March every year from 1988.

Two favorable comparisons can still be made. March home sales were the first to show a year-over-year increase in sales, since December 2009. Secondly for the month of March, the total sales made were the highest since 8,317 homes sold in March 2007, although it fell short by 22.4 percent of the average number of homes sold in March – 9,016 properties – since 1988.

As regards home sales made out of foreclosure properties, in the month of March the participation is recorded as 31.7 percent of total home sales, from properties lying under pre-foreclosure, scheduled foreclosure auction and repossession by lenders after foreclosure sale public auction.  On comparison, foreclosure property sales peaked at 52 percent of total sales in February 2009, 50.2 percent in March 2009 and this March the figure is down from 36.3 percent recorded in February 2010.

Another area-specific fluctuation observed in SF Bay Area is the jumbo loan market – with the specified limit of $417,000 for high-end home purchases – is lying low now. Before the credit crunch hit the market in August 2007, nearly 60 percent of Bay Area home loans were falling under this segment, compared to last month’s jumbo loans made up a mere 29.5 percent.

The reason for the above decline is lack of interest by borrowers in Adjustable-Rate-Mortgages (ARMs). Prior to the credit crunch in 2000, the average home loans through ARMs was 50 percent, declined to 13.7 percent of all home purchase loans in September 2008 and dwindled to mere 8.7 percent in March 2010.

Posted by Amitesh Kumar on May 10 2010. Filed under Housing, Short Sales. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry