Posted on: Tuesday, November 27, 2001

Bay Area housing prices declining

By Michael Liedtke
Associated Press

SAN FRANCISCO — Mid-priced homes in the San Francisco Bay area became less expensive in October than the year before for the first time since 1995, while soaring demand continued to drive up Southern California home values, a real estate research firm reported yesterday.

A mid-range home in the Bay area sold for $366,000 in October, down 0.8 percent from $369,000 at the same time last year, according to DataQuick Information Systems. The figures are based on sales of new and existing homes and condominiums.

Another report based on sales of existing houses is scheduled to be released today by the California Association of Realtors, an industry trade group.

Although the year-to-year decline registered by Data-Quick is small, it signals a significant swing in the Bay area's housing market, where homeowners reveled in steadily rising property values throughout the last half of the 1990s.

It marked the first year-to-year decline since September 1995, when a mid-priced home in the Bay area sold for $221,000, down 0.9 percent from $223,000 the previous year. After that trough, Bay area home values began an ascent that peaked at a median of $386,000 in March, DataQuick said.

But even as home prices fell from that March high, values still remained above last year's levels until October.

The price dip came during the throes of a prolonged sales slump. Bay area home sales through the first 10 months of this year are running 17.3 percent below last year's volume, DataQuick said.

October's downturn doesn't necessarily herald the beginning of a long slide in Bay area home prices, said DataQuick President Mike Ela.

"We expect the Bay area market to stay on an even keel through the rest of the year and on into 2002," Ela said.

Meanwhile, the Southern California home market remained robust during October as buyers enticed by the lowest mortgage rates in a generation swarmed into the market to drive up prices.

Boosted by the region's highest October sales volume in 12 years, mid-range homes in Southern California sold for $233,000, an 8.9 percent increase from $214,000 at the same time last year, DataQuick said. Riverside County and San Diego County were particularly hot markets, with home values rising by 16.6 percent and 12.9 percent, respectively, from the previous year, according to DataQuick.

The contrast in Bay area and Southern California figures illuminates the divergent fortunes of the two biggest regions in the nation's most populous state. Average housing rents in the Bay area and Southern California also moved in opposite directions during the summer, according to a study by RealFacts.

With nearly one-third of its non-farm payroll tied to the high-tech industry, the Bay area is still suffering from the crash of the dot-com economy that enriched the region during the late 1990s.

Meanwhile, luxury homes in Los Angeles gained 2.4 percent in the third quarter, to $1.31 million — the highest average since 1992, according to First Republic. Luxury homes in San Diego climbed 6.2 percent in the third quarter, to an average of $1.39 million.