Silicon Valley's condo sector took a hit in October, revealing the first year-to-year median price-decline in more than three years, even as single-family home prices regained a fraction of price points lost in recent months.
Perhaps more telling, sales overall have slipped to near post 9/11 levels when a stunned nation "went into shock and did nothing," said Richard Calhoun, real estate broker at Creekside Realty in San Jose.
The median price of condos in closed sales slipped in October to $490,000 down from $495,000 a year ago and down from the same level, $495,000 a month ago. That was the first year-over-year price decline since July 2003, Calhoun said.
Condos took an average 47 days to sell in October, nearly twice as long as the 24 days a year ago. Buyers paid condo sellers, on average, 99.3 percent of the asking price.
The single-family median price rose from $769,000 in September to $775,000 in October this year and was up from $741,000 a year ago, according to Calhoun's Bay Area Real Estate Market Newsletter, a report comprised of statistics from the area's multiple listing service, RE InfoLink of Campbell, CA.
The last time year-to-year single-family home prices declined was also July 2003.
Recently, single-family home prices lost nearly $50,000 in the late summer, but regained $7,000 of that amount to help keep the year-over-year price gain intact.
Single-family homes, on average took 54 days to sell, up from 34 days a year ago.
Inventories of condos and single-family homes fell slightly from September to October this year, but at 5,151 remained well above the 4,181 properties for sale in October 2005.
The month-to-month inventory decline is likely representative, in part, of sellers pulling out or waiting for better days. Only 1,267 properties -- condos and single-family homes combined -- sold in October this year, down from 1,704 a year ago.
"More of the folks who don't have to sell are coming off the market and that's the beginning of a nice change," said Edwin Resuello, president of the Santa Clara County Association of Realtors
"More buyers are focusing on what they really want to do. If they plan on selling within a year, they should not be buying. That would be turning the American Dream into an American Gamble," said Resuello, also broker-owner of Realty World Silicon Valley Homes.
Buyers, on average, gave sellers of single-family homes only 98.9 percent of their asking price, down from 100.1 percent a year ago. For both condos and single-family homes, the percentage buyers pay on sellers' asking price has been slipping for months.
"I don't think it's prices. Mortgage payments are too high. We went from a 4.75 percent interest rate to 6.75 percent. That's a 50 percent increase and in someone's mortgage payment, that's huge," said Calhoun.
During the market boom this decade Freddie Mac's Mortgage Market Survey reveals the lowest rate was 5.21 percent in June 2003 for fixed rate mortgages (FRMs), rates tend to be lower in the West and 1-year adjustable rate mortgages (ARMs) came in as low as 3.5 percent. Now, however with increases in Federal benchmark rates, ARMs have steadily adjusted upward, forcing refinancing and a growth in foreclosures.
"The point is that's a dramatic increase in the cost to home owners without a change in the price of a home. It makes a dramatic difference," said Calhoun.
Janet Houde, an independent real estate broker and past president of the Santa Clara County Association of Realtors Association, says the "hype" about prices coming down is over rated.
She says the market is segmented by price range and by geographic areas.
Calhoun's statistics do reveal more price strength in the northwest sector of the market. In Palo Alto, buyers were still paying an average 100.2 percent of the sellers' asking price. The percentage was 99.9 percent in Cupertino and 99.8 percent in both Sunnyvale and Mountain View.
Calhoun also says, "The overall global trend is that the 'red hot' went out of the red hot wave. The northwest is doing best, but in general, even that area is slowing down because the market is trending toward slowing down."
