Bay Area home prices rising

The $390,000 median sales price paid for a Bay Area home last month amounted to a modest gain from a year ago, but that was the first time year-to-year prices rose in nearly two years.

The gain stems from a smaller mix of foreclosed homes and more sales of properties priced above $500,000 compared with a year ago, said a report released Thursday by MDA DataQuick.

The median price for new and existing single-family houses and condos that changed hands in October rose 6.8 percent from September and was up 4 percent from October 2008.

"That's off obviously a low price last year but I think in a certain sense it's more positive news," said Matt Anderson, a partner at Oakland-based Foresight Analytics, a

At the same time, the pace of home sales slowed compared with a year ago. Some 7,933 homes closed escrow in October, up 0.7 percent from September and a 4.2 percent increase from October 2008.

The last time the median sales price rose on a year-to-year basis was November 2007, when there was a 1.5 percent gain. The median is the point at which half the homes sold for more and half sold for less.

October's numbers are a turnaround from previous months that saw sharp declines in homes prices and big increases in home sales on a year-to-year basis as bargain-priced foreclosures

Last month, homes in the Bay Area that had been foreclosed on during the past 12 months made up 31.9 percent of resale activity, down from February's peak of 52 percent and down from the October 2008 rate of 44 percent. Homes priced above $500,000 accounted for 36 percent of all sales last month, up from 34.9 percent year ago and this year's low of 22.7 percent in January. From January 2000 through December 2007, foreclosures accounted for just one percent of monthly resale activity.

The changing mix of what's selling now means that the average homeowner may not see the same price gains reflected in the DataQuick report, Anderson said. Still, having more higher-priced homes and fewer foreclosures is a sign of an improving market, he said.

"The regional price statistics mainly reflect the fading of the foreclosures and the uptick in high-end activity in recent months," John Walsh, MDA DataQuick president, said in a statement. "Down at the neighborhood level, different things are happening depending on location, but the big picture is that prices in many areas appear to be bouncing along bottom. Whether that bottom is permanent is the subject of endless debate right now."

The first-time homebuyer tax credit program helped bolster sales, said the report. That program, which was to expire at the end of November, was recently extended through June 30 by Congress and also added a $6,500 federal income tax credit for qualified repeat buyers.

The number of foreclosure notices sent out to borrowers behind on their payments continues to rise from a year ago at the same time lenders are taking back fewer foreclosed homes to sell on the market. The declining inventory of foreclosure resales is linked to lenders opting for short sales or putting borrowers in loan modification programs, said the report. But how long foreclosure resales will continue to decline is unclear. Some economists have raised concerns that many borrowers in loan modification programs have already or will end up re-defaulting on reworked loans, which would then result in more foreclosure resales in the marketplace.

In Alameda County, the median sales price in October was $369,000, a 0.1 percent drop from a year ago while in Contra Costa County, the median sales prices was $280,000, a 1.8 percent decline from a year ago. In San Mateo County, the median sales price in October was $580,000, a 4.1 percent drop from a year ago.

The problem with county medians is that they don't reflect home prices in different communities, said Paul Ward, broker-associate in the Danville office of Keller Williams Realty.

"Contra Costa County is so diverse. There are 100 micro-markets in the area. In the San Ramon Valley here and Lamorinda, business has actually been quite good. In the last few months, we've been getting a lot of multiple offers for some houses in the $400,000 to $600,000 price range," said Ward. At the same time, foreclosure sales are still going strong in Antioch and Pittsburg and San Leandro, he added.

Tammy Silverstri, a Realtor in the Burlingame office of Coldwell Banker, thinks the market in San Mateo County has leveled off.

"I think we've hit bottom. I think that's what (buyers) were waiting for. These last three months have really picked up again compared to a year ago" she said. "People are being more realistic in pricing their homes and getting multiple offers again."

Reach Eve Mitchell at 925-952-2690.