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Apr 3

San Francisco Real Estate - Flat Home Sales

by Mary Teresa Fowler
San Francisco Real Estate

During February, San Francisco Bay experienced flat home prices and sales. Foreclosures and short sales accounted for over 50% of home resales in the area. Sales of recent foreclosed homes accounted for nearly one third (32.6%) of the Bay Area's February resale market. That figure was down from 35% in January and 36.3% the same time last year.

Short Sales

Short sales (sale price lower than the amount owed by the previous owner) made up 20.3% of resales. According to San Diego-based DataQuick Information Systems, only 243 newly built homes sold in the Bay Area during February – the lowest number of any month since the firm started keeping records in 1988. Builders find it difficult to compete with distressed property prices.

Home Prices

Home prices in the San Francisco Bay area fell for the fifth consecutive month in February. During a recovering economy, many buyers tend to exercise caution. The recent five-month price decline followed a year of annual gains.

At market peak in 2007, the median sales price in the Bay Area was $665,000. That median price fell considerably and hit $290,000 in 2009 before reaching its current level. The dramatic change resulted from a significant loss in home values spurred on by a housing oversupply and bargain prices created by foreclosures.

DataQuick Information Systems points out that median prices fell 0.2% from January’s price of $338,000 and 4.7% from last year within the nine counties. Median prices stayed down about 10% from $375,000 at the end of 2010. February home sales increased half of a percentage point to 4,991 from January sales but were 31% lower than December purchases (7,200).


Yet San Diego-based DataQuick Information Systems reports that absentee buyers and cash purchases are the highest on record. Investors and cash buyers have been looking for bargains including distressed homes. Generally, investors own homes already but they are looking for rental opportunities.

Cash Buyers

Income from rent can cover various expenses (mortgage, insurance, property taxes) as well as provide additional cash flow. Builders cannot compete with the prices of resale houses especially distressed homes. With the current oversupply of distressed properties, the market is attractive to cash-only buyers and investors. 

Cash buyers in February accounted for almost 30.9% of all sales. Many cash buyers purchase properties at low prices, probably make a few changes, and resell them at higher prices.  Buyer who pay with cash tend to flip properties rather than hold on to the homes. A considerable portion of the cash buying in the Bay area involves homes selling for less than $400,000.

Spring Selling

Traditional home buyers are willing to wait for bottom prices. Analysts point out, however, that home sales in the early months of the year are not always certain indicators of future activity. Spring and summer are known as the “homebuying seasons.” The pent-up demand of winter can result in significant sales during springtime – especially in a rebounding economy.


HousingWire.com; San Francisco Bay area home prices drop for fifth consecutive month; Kerri Panchuk; March 17, 2011

BusinessWeek.com; San Francisco Bay area home prices, sales are flat; March 17, 2011

MercuryNews.com; Cash buyers flood into market to buy Bay Area homes as prices fall; Eve Mitchell; March 17, 2011

Image courtesy of frontdoor.com

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