"Up to now, I haven't seen much change in the high end buyers and sellers, but now if their portfolios are in the toilet, how will that change things?"
That quote by me in a bold sidebar was on the front page of the September 19, 2008, edition of the San Jose Mercury News in an article headlined, "Housing Plunge." A link to the newspaper's on-line version is below (I do not know how long the Mercury News will keep the article active):
In case that link disappears, I have "cut and pasted" the article in its entirety below:
n a season of stunning financial news comes more drama from the local housing front: The median house price in Santa Clara County plunged 26 percent last month compared with a year earlier, the county's steepest decline on record.
And for the first time since 2004, the median house price in the county slid under $600,000, according to real estate information firm MDA DataQuick, whose records go back to 1988. Houses sold in August went for a median price of $592,750, down from a hefty $805,000 in August 2007.
As bad as that might appear, the worst decrease in any Bay Area county last month was in Contra Costa County, where the median house price dove 48 percent from a year earlier.
The last time Santa Clara County houses sold for a median price less than $600,000 was in September 2004, when the figure was $595,000. The median price marks a halfway point, meaning half the homes sold for less than the median figure, and half for more.
But there's no cause for general panic. In a varied market like Santa Clara County's, median price figures do a poor job of telling individual homeowners how their property values are faring, said Dana Grover, a longtime San Jose appraiser of residential real estate.
"There are segments of the county that are not declining," he said, citing Saratoga, Los Altos, Cupertino and parts of Los Gatos as some of the pockets where home values have not budged much despite the general housing slump. Other areas, including Gilroy and parts of South and East San Jose, have been hit hard by foreclosures and have seen their home values fall, he said.
"You have to look at your own particular neighborhood and your own particular price range. You just can't take a blanket approach" to gauging a home's value, he said.
Though most homes in Silicon Valley have lost some value in the past year, the dramatic difference in the median price is also a result of significant changes in the types of homes selling this year compared with last. The August 2007 median price reflects a period in which primarily expensive homes were selling, because low-money-down loans for first-time buyers were suddenly unavailable. That drove the median price up, even as home values in some parts of the valley were falling.
But by this summer, it was mostly lower-priced homes that were selling. One reason is that interest rates for the large loans typically used to finance Silicon Valley homes had become relatively expensive, at 7 percent or more. Another reason is that prices for bank-owned foreclosure properties had dropped enough that those homes began to sell quickly.
Last month, nearly 25 percent of resale transactions were homes that
Another example of the changing "market mix": Last year, during a five-week period in September and October, only seven single-family houses sold in the county for less than $450,000, said Richard Calhoun of Creekside Realty in San Jose. This year, in a five-week period in August and September, 511 houses sold for $450,000 or less.
Whether fueled by bargain hunters trying to buy bank-owned properties or by move-up buyers motivated by this month's low mortgage rates, September home sales are off to a strong start.
According to figures from realty brokerage Coldwell Banker, 367 single-family houses went "into contract" last week, meaning buyers struck deals with sellers. That's the most transactions initiated in any week since June 2004.
But the past week's financial news, including teetering investment banks and wild swings in the stock market, may dampen some buyers' enthusiasm — especially those in expensive neighborhoods, where home purchases are more frequently financed using proceeds from stock sales.
"Up to now, I haven't seen much change in high-end buyers and sellers, but now if their portfolios are in the toilet, how will that change things?" Grover said.
According to DataQuick, which gathers information from public records, a total of 1,096 previously owned houses changed hands in Santa Clara County last month, down 4.7 percent from August a year earlier. That small percentage change represented an improvement, as most months this year have seen house sales off by double digits compared with 2007.
Condo sales in the county remained well below their 2007 levels. Last month, 330 condos and townhouses sold in the county, down 25.2 percent from August 2007.
Across the nine-county Bay Area, a total of 7,232 new and resale houses and condos sold last month, down nearly 5 percent from July, and down 0.9 percent from August 2007.
In San Mateo County, the median house price in August was $672,500, down 23 percent from a year earlier. In Alameda County, the median price of single-family houses sold was $463,500, down 29.8 percent.
Contra Costa County's median price for houses fell a staggering 48.4 percent since August 2007, to $315,000. In that county, however, bargain hunters were busy: Sales of houses rose 70 percent from last year, from 788 in August 2007 to 1,339 houses sold last month.
Sales of previous foreclosures made up 36 percent of all Bay Area resales last month. The concentration was highest in Solano and Contra Costa counties, where more than 50 percent of transactions were previous foreclosures.
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