Foreclosures drags down home prices

A rising tide of foreclosure sales in Sonoma County is pulling down home prices, according to a report issued Thursday.

Of the homes sold in Sonoma County last month, 29 percent had been in foreclosure at some point in the past year, according to DataQuick Information Systems, a La Jolla-based real estate data service. This increasingly large chunk of the county's real estate sales is driving down the most widely watched measure of housing values, DataQuick analyst John Karevoll said.

The median price of a Sonoma County home plunged 21.3 percent in March, compared to a year ago, reaching $409,500, according to DataQuick, which tracks new and resale houses and condos across the state.

The typical home, however, lost only about 10 percent of its value during the same period, Karevoll estimated. About half of the decline in the median price has been caused by a change in the mix of sales, he said.

Sales in March were concentrated among lower-priced homes and foreclosure properties, which are priced about 15 percent less than non-foreclosed homes in the same neighborhoods, Karevoll said.

"About half the decline in median price is due to the shift in mix. The other half is depreciation," he said.

The impact was exaggerated in March because an unusually small number of homes changed hands. Sales across the Bay Area have tumbled to their lowest level in more than two decades as buyers and sellers wait out market turbulence.

For the seventh straight month, home sales remained at a record low. In March, 4,898 new and resale houses and condos sold across the nine-county region, down 41.1 percent from a year ago.

"We are well below anything we have ever seen before," Karevoll said.

The price and sales figures differ from The Press Democrat monthly real estate report, which focuses on single-family resale homes.

March marks the beginning of the annual spring home-selling season, and Bay Area sales rose 22.8 percent from February. But buyers remain cautious in the face of falling prices and tight mortgage lending, particularly for larger loans that carry higher interest rates, said Marshall Prentice, DataQuick president.

"Other parts of the state have been hit harder by the downturn in the housing market than the Bay Area. For the most part that's the Central Valley and inland Southern California. It still appears that a lot of Bay Area activity is just on hold, waiting for the mortgage markets to open back up," Prentice said.

The foreclosure problem is far worse in other parts of California. Statewide, 38 percent of homes sold in March were in foreclosure at some point in the past year -- believed to be an all-time high -- compared to 24 percent of the sales in the Bay Area.

But prices are falling across much of the state, including the Bay Area. In March, the price of a typical home in the Bay Area fell to $536,000, down 16.1 percent from a year ago.

The state's median home price last month was $358,000, down 26 percent from $484,000 a year ago, when the market peaked, Data-Quick said.

One factor in the price decline is that less expensive homes are selling better than those that require larger loans.

These so-called jumbo loans are often needed to purchase homes in the Bay Area and Sonoma County. A jumbo is a mortgage above $417,000. Loans under that limit are known as conforming mortgages.

A year ago, jumbo loans -- mortgages above $417,000 -- accounted for 62.2 percent of all Bay Area home loans. Last month they were 29.8 percent, according to DataQuick.

Lenders raised prices on jumbos last fall as foreclosures soared to record levels because they are considered riskier mortgages. Foreclosures have not abated and jumbo rates remain high.

Buyers have found little relief even after federal mortgage agencies recently moved to pump more money into the housing market by agreeing to temporarily back loans up to $662,500 in Sonoma County and as high as $729,750 in pricier parts of the Bay Area.

For instance, buying a $500,000 home with a 20 percent down payment and a conforming loan would carry a $2,430 monthly mortgage.

Buyers for a $500,000 home who can only make a 10 percent down payment must take out a jumbo loan and would have a $2,956 monthly loan payment.

Staff Writer Michael Coit and the Associated Press contributed to this report.