Solano housing prices still the lowest in the SF Bay area

Bay Area home sales, price up a bit in November

Carolyn Said, Chronicle Staff Writer

Thursday, December 17, 2009

The Bay Area real estate market showed continued signs of stability in November, according to a real estate report released on Thursday. Both the median price and the number of homes sold were higher than a year ago - albeit a time when the wrenching financial crisis had paralyzed much activity.

Contractor Jeff Horwitz (left) meets with Janelle and Eric Boyenga in the home they plan to flip.

Photo: Liz Hafalia / The Chronicle

anelle and Eric Boyenga check work being done on the exterior of the house they plan to flip.

Photo: Liz Hafalia / The Chronicle

A total of 4,901 existing homes changed hands in the nine-county area in November, up 15.5 percent from a year ago. The median price was $405,000, a 15.7 percent increase from last November.

"Things are closer to normal now, but it's easy to beat the numbers" from November 2008, said Andrew LePage, an analyst with MDA DataQuick, the San Diego research firm that released the report. "That was a very different market ... a grim period where the high end was comatose, and what sold and sold fast was heavily discounted foreclosures, usually inland."

By contrast, this November's sales showed a smaller proportion of foreclosures and more strength in higher-cost areas, both of which buoyed the median price. A greater proportion of high-cost sales raises the median price.

Foreclosure resale’s accounted for 32.5 percent of existing-home sales in November, compared with 46.8 percent a year ago. Sales in the higher-cost counties of Marin, San Francisco, Santa Clara and San Mateo accounted for 42.3 percent of November's total, up from 35 percent a year ago.

The number of foreclosures in the market has fallen as many troubled borrowers are in extended negotiations seeking to reduce their mortgage payments. But most lenders have been slow to offer permanent loan modifications. Experts think that the lengthy pipeline of struggling homeowners eventually could lead to a fresh surge of foreclosures, which would destabilize the market.

Government stimulus - including a homebuyer's tax credit that expires April 30 and Federal Reserve action to keep interest rates low - continue to be potent forces. Without the government intervention, the market could easily lose its equilibrium, experts said.

Lured by bargain foreclosures, real estate investors have become a larger presence than in the past. Absentee buyers account for 15.7 percent of November's Bay Area sales, and buyers paying all cash purchased 22.4 percent of the homes that sold. Banks selling foreclosures prefer all-cash buyers because purchases close quickly and easily.

"There's still some of that gold-rush mentality among investors," LePage said. Competition among investors may have helped fuel modest price increases in areas where inventory was tight, he said.

Janelle and Eric Boyenga, who are both real estate agents with Intero Real Estate in Los Gatos, are among the investors who see a market opportunity. Along with a partner, the couple bought a foreclosed home in San Jose's Willow Glen neighborhood for $525,000 in late October. They plan to spend three months and a little over $150,000 fixing up the four-bedroom home, then hope to sell it for about $900,000 in January.

Paying all cash and accepting the house in as-is condition helped them compete with several other offers, they said.

They chose Willow Glen because it's a tight-knit family neighborhood that is relatively upscale for San Jose; had some foreclosures but not a tremendous number; and has homes at a range of prices. They plan to rehab the 1950s house to make it like new, redesigning the floor plan and landscaping.

"When people see a home that (needs a lot of work), they don't want to pay a lot of money, but when it's perfect ... people are willing to pay a premium," Janelle said.

Tight inventory should help spur demand for the house, they said. Santa Clara County's inventory is the lowest they've seen since 2005, with fewer than 2,000 homes for sale, less than half the normal amount.

E-mail Carolyn Said at csaid@sfchronicle.com.

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