Bay Area home sales crash to 20 -year low

The San Francisco Chronicle attributed this to lenders backing off from “jumbo loans” – those over $417,000, but there are several other factors:

The median price for resale homes was almost steady at $670,000, a scant 0.4 percent more than $667,500 last September. The median price declined in five counties – Alameda, Marin, Napa, Solano and Sonoma. The Bay Area median price has been propped up by a tilt in the mixture of sales – more high-end homes have changed hands, boosting the median. But with the credit crunch making it harder and more expensive to get a larger mortgage, the buoying effect of expensive-home sales was reduced in September. “When you combine the price difference (for jumbos) with the restrictions in underwriting guidelines, that was a double whammy,” said Rob Chrisman, director of capital markets at NL Inc., a mortgage bank in Walnut Creek. “To compound it, buyers were possibly thinking that prices were stagnant or coming down in other parts of the nation and California, so maybe prices in the Bay Area would come down, so let’s wait. So you had three strikes against the jumbo market.” … The rising rate of foreclosures and defaults also hurts sales. When a lender forecloses, it puts the property on the market, often at a slight discount. Before a bank forecloses, desperate homeowners who are behind in their payments often try to unload the property as a “short sale” for less than they owe on the mortgage. Both types of sales further depress prices…. Rising inventory levels are another factor that impact sales. The number of for-sale homes in September rose in seven Bay Area counties compared with a year ago, according to MLS data compiled by ZipRealty…. “This is a cyclical downturn fueled by a lot of really dumb loans made from 2004 to 2005, the so-called subprime loans,” (real estate broker Betsy) Karevoll said. “We’re not in a recession. We’ve got a fairly stable economy. It’s an entirely different correction than it was back in the mid ’90s, for example, when jobs were being lost, people were leaving California, people were making less money. This is somewhat uncharted territory.”