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Home prices still rising
By Eve Mitchell, BUSINESS WRITER Inside Bay Area The Bay Area's median home price continued to climb at nearly a 20 percent clip in September, but the number of homes sold fell and observers pointed to higher inventory and the steady rise in interest rates from historic lows. Bay Area home-price appreciation has topped 17 percent each month this year. In September, the Bay Area's median home price rose $100,000, or 19.4 percent, from a year ago to $616,000, La Jolla-based DataQuick Information Systems reported Tuesday. That's down 0.5 percent from the record-setting $619,000 in August. The median price is where half the homes sold for less and half sold for more. "The Bay Area real estate market seems to have settled into a steady state, with few indicators pointing to any upcoming change. Supply and demand seem stable. We are keeping an eye on rising mortgage interestrates, which could slow things down somewhat by the end of the year," DataQuick President Marshall Prentice said in a statement. In Alameda County, the median home price in September was $579,000, up 20.6 percent from a year ago. In Contra Costa County, it rose 24.6 percent to $577,000. In San Joaquin County, it rose 29.5 percent to $430,000. While home prices have continued rising, there are indications the market may be slowing. Five percent fewer homes have sold in the region since the start of the year, DataQuick said. Also, a separate report released Tuesday said that the East Bay has a 52 percent chance of experiencing price declines in the next two years. The report by Walnut Creek-based PMI Mortgage Insurance Co. does not estimate how much housing prices could decline. Not only are the number of homes being sold in the Bay Area slowing, so too are the number of mortgage applications to buy homes. Sue Rainwater, a mortgage broker at CMG Mortgage in San Ramon, estimates that mortgage applications dropped 20 percent in September compared with August. "I think it's a couple of things. One is a slowing of the market. There's more inventory. We're seeing a little bit of saturation in the (market), a lot of listings," she said. "And (interest) rates have been moving up just a bit." Indeed, they have. Last week, rates for 30-year-fixed mortgages edged above 6 percent for the first time since March. Steve Dhillon, a Realtor with ERA The Property Professionals in Fremont, thinks the market is starting to flatten. He notes that inventory is increasing and slowly rising interest rates are resulting in fewer homes being sold. "We are seeing a more normal model in the market. I've got more listings now and they are taking longer to sell," Dhillon said. "And then you've got interest rates. Historically, rates are very attractive, but they are creeping up a little bit." At the beginning of the year, Union City had just 15 homes on the market; now there are 84 homes for sale, he said. With home prices breaking records, became the latest regulator to voice concern over people who took out interest-only or option adjustable-rate mortgages to buy homes they otherwise could not afford. Some borrowers and mortgage lenders holding such loans could be at risk if housing prices drop or interest rates rise, Powell said. In the Bay Area, interest-only loans account for roughly one out of three active home loans while adjustable-rate mortgages account for about one-third and fixed-rate loans account for about another third, according to LoanPerformance, which measures lending activity. Interest-only loans typically let borrowers pay no principal for three to five years before monthly payments start to increase. "Credit losses are very low now, but mortgage lenders need to be prepared for higher losses," Powell said in a speech to a gathering of community bankers in Orlando, Fla. "Homeowners taking on these types of mortgage product need to understand how their obligation may grow when their low introductory interest rates expire." Eve Mitchell can be reached at (510) 208-6474 or emitchell@angnewspapers.com |
