Bay Area Sees Mid-Range Home Prices Decline

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

A mid-range home in the Bay Area sold for $366,000 in October, down 0.8% 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, as well as condominiums.

Although the year-to-year decline registered in DataQuick’s statistics is small, it nevertheless 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 in the Bay Area’s residential property since September 1995, when a mid-priced home in the region sold for $221,000, down 0.9% from $223,000 in the previous year. After falling into that trough, Bay Area home values began an ascent that peaked at a median price of $386,000 in March of this year, DataQuick said.

Even as Bay Area home prices fell from the March high, the values still remained above the levels of last year’s comparable periods until October’s shift.

Last month’s 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% 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% 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% and 12.9%, respectively, from the previous year.

The Bay Area’s tech-driven hangover is causing even greater pain in the luxury market, which consists of homes worth at least $1million.

Bay Area luxury homes sold for an average of $2.21 million during the three months ended in September, a 7.5% decline from the second quarter, according to a report to be released today by First Republic Bank, a San Francisco lender that caters to wealthy households throughout the state.

It marked the first quarter-to-quarter drop in the Bay Area’s luxury home market since the first three months of 1999.

Luxury home prices could plunge by an additional 20% to 30% before the Bay Area market bottoms out in the spring of next year, predicted Scott Dancer, a Coldwell Banker real estate broker in Woodside, one of the Bay Area’s most affluent towns.

Meanwhile, luxury homes in Los Angeles gained 2.4% 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% in the third quarter of 2001 to an average of $1.39 million.