Bay Area sees softening market but prices still high

By Melissa Wirkus

The once hot real estate and housing market seems to be cooling off. After all, all of the signs point to a slow down.
There is a surplus of un-bought homes just sitting on the market, reflecting the lack of buyer’s interest. Prices are still relatively high, but seem to be declining in appreciation or just plain flat.

Every city across the United States is reacting to the slowing market differently, some are fairing better than others.
The San Francisco Bay Area is one group of cities that is seeing the effects of a slower market, but whose prices still remain sky-high.

A September 13, 2006 article by Julie Bennett of The Wall Street Journal, “A superheated market softens, but prices remain high,” looks into this cooling Northern California market.

The article starts out by painting a picture of the state of the current market with a story of a newlywed couple who just bought a 930 square foot cottage with no bathroom for the high price of $661,000 in Redwood City, Calif.!
As you can see from this high price tag for a fixer-upper, the market in the Bay Area has not slowed completely. Prices are still very high, but they are on the way down.

“However, in the upscale Marin County town of Tiburon, the median selling price of homes dropped 2% from the second quarter of 2005 to the same period this year, to $2 million.”

There has only been minimal change in the prices of homes in this area, but it is now taking longer to sell a home then it did compared to a year ago.

“In the East bay community of Arinda, houses that used to sell in a day now take about a week to secure buyers. According to Prudential California Realty, in the housing resale market in the nine counties that make up the San Francisco Bay Area, 25% fewer purchases were completed in the second quarter of this year than in the same period last year. In the Bay Area, there are one-third more houses and twice as many condominiums on the market this year, however, and homes are staying on the market longer.”

The reason why so many homes are staying on the market so long right now is because of a few things.
First of all, there is such an abundance of homes on the market, that buyers may have just too many to choose from and know they can take their time in choosing the perfect home that fits all of their needs.

Secondly, buyers are waiting on the sidelines of the housing market in hopes that prices will go down even more. They know that homes are not selling as quickly, so they hope sellers will start getting desperate and reducing their prices.
“The softer real estate market is already impacting the sale of new condo units. According to Demetrius James, sales manager for The Palms, a 300-unit condo building in the hot South of Market area: ‘We appeal to Baby Boomers who are downsizing from their big suburban homes, but we’ve lost some potential buyers because they’re having trouble selling their houses in this market.’”

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