Bay Area housing prices fall 21.7%

Bay Area home sales dipped in May despite a wave of foreclosure sales in Sonoma and other outlying counties that helped push prices to a four-year low.

Sales of all new and resale houses and condominiums slowed in May across the nine-county region after an upsurge in April.

The 6,216 purchases in May fell 23.1 percent from 8,080 a year ago, according to DataQuick Information Systems, a real estate research firm.

The typical Bay Area home sold for $517,000 in May, down a record 21.7 percent from a year ago, sinking to the lowest median since summer 2004.

Prices continue falling because sales are concentrated at lower price ranges and the falloff has been steep in the region's more expensive areas.

Sales increasingly are for distressed resale homes where buyers are shopping for bargains.

Across the Bay Area, 25.6 percent of the homes that resold in May had been foreclosed on at some point in the past year -- up from 3.3 percent a year ago.

Sonoma County was among the regions registering a higher rate, with 26.6 percent of the existing homes sold in May foreclosed on in the past year. Solano County's foreclosure resales were 57.6 percent of existing home purchases, and in Contra Costa County they were 43.3 percent.

Buyers are drawn in by banks discounting foreclosed homes and homeowners cutting prices to sell and avoid losing properties to lenders.

"These communities have been attracting first-time buyers, first-time move-up buyers and investors. Prices are getting more in line with incomes, and some people feel they're getting a good, or at least a much better, deal," said Andrew LePage, DataQuick analyst.

Areas with the most affordable homes registered year-over-year sales gains, bucking the overall Bay Area decline. Two-thirds of the zip codes with annual increases were in Sonoma, Solano and Contra Costa counties.

May median sales prices in these areas, on average, were down 24 percent from a year ago and down 36 percent from their peaks.

"The lower-priced homes on the market are flying off the shelves and being bombarded with multiple offers and overbids," said Toni D'Angelo, a Coldwell Banker agent in Santa Rosa.

For instance, a foreclosed Santa Rosa home valued at $550,000 three years ago was put on the market by the bank for $240,000. There were 13 offers, and it sold for $280,000.

Homes above $500,000 and those in even more expensive regions are sitting on the market, including Marin, San Mateo and Santa Clara counties.

"It's much different in the more expensive coastal markets," LePage said. "Prices are off their peaks but typically haven't fallen as much. Foreclosures aren't rampant, and so far there's been much less motivation among sellers. But demand remains weak at today's prices, and the market continues to be hampered by the credit crunch."

Buyers face tougher requirements to qualify for mortgages since foreclosures began soaring last year. High rates on jumbo loans -- above $417,000 -- also can push more buyers out of the market. Jumbo loans accounted for 30.6 percent of Bay Area home purchases in May, less than half the 63.5 percent a year ago.

The typical monthly mortgage payment Bay Area buyers committed themselves to paying was $2,393 in May, down from $3,090 a year ago.

The typical mortgage payment for a Sonoma County home purchased in May was $1,921, down from $2,432 a year ago.

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.