Home sales surge around Bay Area

Bay Area home sales soared in September as buyers pounced on deals in areas flooded with foreclosures, driving down prices to their lowest level in five years, according to a report issued Tuesday.

There are growing signs the housing market is beginning to recover in Sonoma County and other lower-cost inland areas, said John Walsh, president of MDA DataQuick, a real estate data firm that prepared the report.

"For the inland markets, September's relatively strong sales provide more evidence that a recovery got well under way this summer," Walsh said in a statement. "Now it's just a question of whether it will stay on track and provide stable prices and fading foreclosures in 2009, or will it get derailed by an economic crisis."

Sales across the Bay Area jumped 45 percent in September, compared with a year ago, the largest gain in more than six years. A total of 7,271 new and resale houses and condos closed escrow in the nine-county Bay Area in September, up 0.5 percent from August.

The figures reflect escrow closings in September, deals that were initiated by buyers in mid- to late summer before the financial markets melted down and the U.S. economy slowed.

Those developments could be a drag on sales. Buyers suffering investment losses could have less cash for down payments. Others could be wary about taking on a mortgage if they worry about losing their jobs, real estate agents said.

"The bad economic news has chased some clients out of the market. Some people have decided to pull in their horns. We've had clients cancel escrows," said Ron Pavelka, an agent with Frank Howard Allen in Cloverdale.

The fall season started strong as home sales surged across the Bay Area in September, when purchases typically decline after the busy summer season.

The region's less-expensive inland markets pushed sales up sharply. Sonoma, Contra Costa, Napa and Solano counties together accounted for nearly 62 percent of Bay Area sales, compared with 52 percent a year ago.

"We're seeing a combination of first-time home buyers, people moving up to the area. We're seeing investors out kicking tires and starting to pick up properties," Pavelka said. "It's definitely making a dent in the market."

Pavelka recently put a family into an 1,800-square-foot Cloverdale home they purchased out of foreclosure for $324,000. The previous owner bought the house for $565,000 in 2005 before Sonoma County's housing market began its steep downturn.

Prices are falling as a majority of sales are made at lower price ranges.

The median price paid for all new and resale houses and condos sold in the Bay Area fell to $400,000 in September, down 10.5 percent from August and a record 36 percent from a year ago, according to MDA DataQuick.

September's median hit its lowest point since March 2003. It has now fallen 39.9 percent from its peak of $665,000 in August 2007.

Several factors contribute to the plunging median price.

Buyers are finding deep discounts on bank-owned homes, as well as properties sold by homeowners hoping to avoid losing homes to lenders.

Nearly 42 percent of all existing homes sold across the Bay Area last month had been foreclosed on at some point in the prior 12 months, up from 36.1 percent in August and 6.9 percent a year ago.

In Sonoma County, foreclosure deals accounted for 48.7 percent of sales, up from 5.7 percent a year ago. Only three counties had higher levels of foreclosure sales: Solano, at 67.9 percent; Contra Costa, 58.7 percent; and Napa, 48.9 percent.

Tight mortgage financing for homes above the half-million-dollar mark is another reason prices are falling. Buyers have found greater difficulty qualifying for jumbo loans needed to purchase houses in the Bay Area's more expensive counties.

With sales concentrated at lower prices, Bay Area buyers are taking out less costly mortgages. The typical monthly mortgage payment for purchases last month was $1,890, down from $3,171 a year ago. In Sonoma County, buyers committed to a $1,642 payment, down from $2,536 a year ago.

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