Northern California Home Sales Still Dropping

By AJ Fanter
Local Lender Columnist
Dec 1, 2007
According to a report released by DataQuick, sales of homes in the Bay Area are continuing to decline. Is now finally the time for you to buy your own home?

Sizzle or Fizzle?

A total of 9,437 new and resale homes and condos were sold last December in the Bay Area, a 15.5 percent decline from the previous year. However, while it’s the biggest drop in sales since November of 2001, it doesn’t necessarily mean that the Northern California real estate market has fizzled out. Instead, it indicates the rates at which property was selling at, and the corresponding home prices, are likely to level off for the next few months. After all, the median price for a single family home in this section of Northern California was $633,000 – still 14.3 percent above the December 2004 price of $554,000.

Why the Drop in Sales? Rates!
While increasing interest rates are likely one cause, another is Freddie Mac and Fannie Mae. These loans, which carry interest rates that are about a quarter of a point less than other loans, are increasing their limits on the single family homes they will buy to $417,000 in 2006 leading some buyers to wait.

Housing Values and Mortgages
While it’s too early to tell if this is a long term pattern or merely an off-month, one thing is certain, when housing values drop and home prices fall, many people immediately assume not only will it be difficult to get some kinds of mortgages such as interest only and negative amortization loans. However, in truth qualifying for these kinds of loans is based more on the qualifications of the person applying for the loan. However, you may be able to qualify for an alternative mortgage, if prices are dropping or you have an alternative mortgage currently, it’s a good idea to consider opting for a more traditional fixed rate loan.

Sources:
DataQuick Real Estate News

About the Author
AJ Fanter is a freelance writer based in Reno, NV.