Home sales still slipping while prices are sky-high

Bay Area’s low inventory contributes to a cooling trend over past fivemonths

If you’re looking for a price break on your next house, you may have to keep waiting.

Faced with famously high prices and a tight housing supply, homebuyers grew shy last month. Across the Bay Area, single-family home sales in July fell 13.4 percent from the year before — the fifth consecutive month of year-over-year declines in the number of houses sold.

“The market is slowing,” said Andrew LePage, research analyst for CoreLogic, the real estate information service. “Despite really low mortgage rates, there’s just a lot of people who can’t quite afford, or come close to affording, a home in the Bay

Area.”

CoreLogic’s latest report shows sluggish activity for the nine-county region, which suffered its slowest July in five years. The picture was similar on the Peninsula and in the East Bay: For the sixth straight month, year-over-year sales fell in Santa Clara, Alameda and San Mateo counties, where home sales were down 14 percent, 12.1 percent and 3.6 percent, respectively. In Contra Costa County, sales declined for the fourth consecutive month, and were down 16.9 percent.

“Four, fiveandsix months in a row — that starts to make a trend,” LePage said.

He added a caveat: July had only 20 business days for transactions to be recorded in the public record, compared with 22 in June. But that doesn’t explain the months-long sales slide, which he attributed to waning affordability, the tight housing inventory and moderately strict credit regulations.

Coupled with regional job growth, those factors again pushed the median price of single-family homes upward in July: by 5 percent, compared with a year ago, to $735,000 for the region — though that was down from June’s record high of $751,500.

July’s median price rose year-over-year by 4.3 percent to a whopping $1.2 million in San Mateo County and by 5.9 percent to $980,000 in Santa Clara County. Across the bay, it climbed by 3 percent to $731,000 in Alameda County and by 8 percent to $540,000 in Contra Costa County.

Even for many who work in lucrative tech jobs, home prices like that are out of sight. Ask Sherri Nichols, who works as a new product implementation buyer for a tech firm in Santa Clara.

Late last year, she sold her 774-square-foot condo in Campbell for $382,000. Then she moved in with her parents — rent-free — stowing money away while searching for her own house in the South Bay or on the Peninsula.

“I looked for at least six months and would’ve totally stayed. All my family and friends live down here,” said Nichols, who grew up in San Jose. “But the market was going crazy, and everything I saw was either really dumpy or in a really rough area — not the best for a single female.”

Finally, setting her limit at $525,000, she widened her hunt to Livermore.

There, she looked at one house and “knew it was the one, instantly. It’s just under 1,000 square feet, with two bedrooms, and there’s a little cottage in the back, so I can make an office.”

It’s also next door to a park and community swimming pool — and her $515,000 bid, one of three offers, won over the sellers, who had listed the home for $510,000.

Nichols closed the deal on July 22 and soon will be commuting to Santa Clara by train.

For much of the Bay Area, July prices were down from the previous month. While a short-term change doesn’t necessarily signify a trend, many experts agree that the market has softened in recent months.

“The market is in a bit of a transition,” said Kim Ott, Nichols’ agent and president of the Bay East Association of Realtors. “Sellers should still be in good shape as long as their agents are educating them: ‘Expect your home to be on the market for a longer period of time. … Do not expect multiple offers.’ We need to be conservative when we price the house. We can’t go aggressively high, because it’ll just sit there.”

Pleasanton-based agent Steve Mohseni, of Mohseni & Associates, has observed a new dynamic after years of frenzied bidding.

“There’s a tug of war between the buyer and the seller. Due to this slowdown, buyers feel that the market is shifting and want to get a discount,” he said. “But sellers still feel they should get their 10 percent over asking. It’s creating a gridlock.”

In the end, Mohseni said, many sellers still “get their price; it ends up with the one buyer who’s willing to pay that premium. But the intensity of the market has dissipated.”

Alain Pinel agent Mark Wong, based in Saratoga, urges sellers to set realistic prices — and he advises some retirees and emptynesters to take the plunge if they’re considering downsizing to a new house.

“If they want to wait, who knows how long it would take for the prices to get back up again?” he said. “Do you really want to wait for something that’s uncertain? Sell it, pocket the money and move on.”

Clients Vinh Diep and Fabian Chau took Wong’s advice. With their two children in college, the couple had considered selling their Milpitas home of 17 years. “We thought maybe in the next two or three years,” Diep said. “But you never know when the housing’s going to crash, or just go down, like it did a few years ago. That’s why we said, ‘OK, now’s the time.’ ”

They painted, replaced carpeting and remodeled the kitchen. Then they listed the house — five bedrooms, three baths — for $1,298,000.

It sold in three days for $50,000 over asking.

“Smooth sailing,” said Diep, a systems consultant.

In the meantime, she and her husband, a financial adviser, are renting a house from a relative in San Jose. “I think the Bay Area prices are way too high,” Diep said. “For now, for two or three years, we’ll stay put. Then we’ll see.”