Bay Area Home Sales and Prices on the Rise?

As reported by DQNews.com - "Bay Area home sales and median price top last year again":

The median price paid for a Bay Area home rose above the year-ago level for the second consecutive month, a reflection of widening price stability, fewer foreclosures selling and more activity in pricier areas. Sales dipped below October but were higher than a year earlier for the 15th consecutive month, a real estate information service reported.

The median price paid for all new and resale houses and condos that closed escrow in the nine-county Bay Area last month was $387,000. That was down 0.8 percent from $390,000 in October but up 10.6 percent from $350,000 in November 2008, according to MDA DataQuick of San Diego.

Prior to its 4 percent annual gain in October this year, the median sale price hadn't risen on a year-over-year basis since November 2007, when it gained 1.5 percent. Last month's median was 33.4 percent higher than this year's low point - $290,000 in March - but was still 41.8 percent lower than the $665,000 peak reached in June and July of 2007.

Skewed data presenting a false sense of housing stability? More pricing pressure and housing woes to come?

'The latest stats show just how much the Bay Area market has changed in a year,' said John Walsh, MDA DataQuick president. 'Financial distress is still a problem with many borrowers, but for now cheap foreclosures have lost their leading role in this housing drama. In the short run, we'll be comparing the new data to some ridiculously low median sale prices a year earlier - medians severely skewed back then by so many inland foreclosures selling, and so few coastal high-end sales.'

'Statistical quirks aside, the longer-term outlook for home values is far from clear,' he continued. 'A lot of people sense lenders are holding back, and that there's at least one more round of foreclosures lurking around the corner. Combine that with less government stimulus in 2010, and it would threaten whatever price stability we see now.'

Currently, there is a tale of two cities in reference to the residential housing market. The bottom end of the market has definitely been firming up in many locales throughout the country. In fact, there has been substantial pricing pressure as inventory levels have been shrinking in this segment of the market. As housing values have been battered, the increased activity and competition has left the price points of six months ago in the rear view mirror. While tax incentives remain in place and interest rates continue to flirt with historic lows, this pressure should continue. When the government begins to rein in the stimulus and depending upon how much additional "shadow inventory" the banks push onto the market will determine if this is a fleeting trend or the beginning of the next push towards home price appreciation. The higher end of the market has been seeing downward pricing pressure in many locales and it appears that many of the Alt-A and Option Arm loans associated with these homes may continue to lead to downward pricing pressure pushing into 2010 especially in states like California.