Bay Area home sales sink

<p>The mortgage lending squeeze drove Bay Area home sales to their lowest level in two decades in September amid signs the housing slump is spreading into higher-priced neighborhoods, according to a report issued Thursday.</p><p>Sales of all new and resale houses and condominiums in the Bay Area plunged 40.1 percent in September, compared to a year ago, according to DataQuick Information Systems, a real estate research firm.</p><p>Sales have fallen across the nine-county region over the past 32 months, but September’s total of 5,014 was the lowest for the month since DataQuick began tracking the market in 1988. The previous low for September was 5,735 in 1991, during the last housing downturn.</p><p>Sonoma County remains one of the weaker housing markets in the Bay Area. Sales fell 35.7 percent in September, compared to a year ago, dropping at a slightly slower pace than other parts of the region. But prices sank 5.7 percent in Sonoma County, the third-greatest decline in the region. </p><p>Overall, Bay Area home prices leveled off in September, ending a six-month climb across the region. The typical Bay Area home sold for $625,000, up 0.8 percent from a year ago.</p><p>Stricter loan requirements and higher interest rates have made it harder for buyers to obtain financing, killing a growing number of sales, said Marshall Prentice, DataQuick president.</p><p>“A lot of escrows just didn’t close in September because the buyers couldn’t get financing. Some of those sales might close this month or next, but many of the deals are going to be put on hold or die on the vine,” Prentice said.</p><p>Lenders have tightened standards because mortgage defaults are soaring as more homeowners fall behind on payments and face difficulty selling homes in a crowded market.</p><p>Families seeking first homes were the first to be pushed out of the market as lenders eliminated subprime mortgages and made other adjustable rate mortgages more difficult to obtain.</p><p>As a result, neighborhoods with large concentrations of entry-level homes suffered more than higher-priced areas. That is one reason home prices have declined in Sonoma County while continuing to rise in more expensive Bay Area counties.</p><p>But now the credit squeeze has spread to loans used by move-up and other more qualified buyers, making these mortgages harder to obtain. Thursday’s report showed the number of homes purchased with so-called jumbo loans tumbled nearly 49 percent between August and September. These loans are used by buyers who need to finance more than $417,000, the highest amount Fannie Mae and Freddie Mac will purchase.</p><p>For smaller loans, the sales declined only 14 percent between August and September, DataQuick reported. Historically, sales drop about 10 percent after August, when the summer homebuying season ends.</p><p>“Jumbo financing has become more available the last few weeks, but lenders are being more cautious than before, and the loans cost more,” Prentice said.</p><p>You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.</p>