Livermore Realtor Mike Perry brings a book to read at his open houses now that the traffic of potential buyers has slowed considerably from the red-hot days of the housing boom when lots of people showed up.
Call it one of the hidden signs of the slowing real estate market, which last month saw the lowest level of Bay Area home sales in five years, according to a report Thursday from DataQuick Information Systems. It started last spring, when sales dropped off as the number of homes on the market began to rise and so did interest rates. Now sales are sliding, interest rates are even higher and prices are increasing at a lower rate.
The Bay Area median price did reach a new record in April, DataQuick said. But the new peak of $628,000 is not that much to get excited about, given that sales volume dropped 25.1 percent from a year ago.
"Open houses have been pretty quiet," said Perry, who is with ReMax Executive. Nowadays, from five to seven potential buyers will visit a typical open house, compared with 15 to 20 in early 2005, Perry said.
"I've seen them as low as one neighbor coming in," Perry said. "What's really crippling us right now is inventory. ... Last year, we were in the 140 to 150 range in the Livermore area and now we are almost sitting on 400 (homes for sale). There is a lot more on the market. The ones that are selling are the ones in prime locations or have aggressive pricing."
Some 8,358 new and resale condominiums changed hands in the Bay Area last month -- the slowest April since 2001 when 7,193 homes were sold, and a 14.2 percent decline from March.
The $628,000 median price -- the price at which half the homes sell for less and half sell for more -- was up $6,000 from March and $3,000 from the previous price peak of $625,000 in November. But while that is a new record, it was only 7.2 percent higher than a year ago, falling below double digits for the second straight month.
That dropoff followed more than two years of double-digit home- price appreciation.
"Appreciation has been flat for six months," said Chris Thornberg, senior economist with the UCLA Anderson Forecast. The $3,000 median price rise from November 2005 to April 2006, compares to an increase from $533,000 in November 2004 to $586,000 in April 2005, a period when the market was hot.
Thornberg said the steep drop in year-over-year sales volume is not surprising.
"This is how a real estate bubble pops. It's not a price pop. It's a volume pop. The good news is there is enough strength in the underlying economy to keep the market solidified," said Thornberg, who estimates that prices could remain flat for five to six years while sales volume remains low. "It's not going to be pretty."
Rates on 30-year mortgages climbed this week to their highest point since the week ending June 20, 2002, helping take the exuberance out of the housing market. Freddie Mac, the mortgage company, reported Thursday that for the week ending May 18, rates on 30-year, fixed-rate mortgages averaged 6.60 percent, up from 6.58 percent last week. Still, rates are well below the historical average of 9.37 percent, according to Freddie Mac statistics going back to 1971.
Kristle Rittenbach, a Realtor with the San Leandro office of Keller Williams Realty, said more people started showing up at open houses in May when the rains let up. But the market is far different from early 2005.
Inventory levels have gone up in the San Leandro area, going from about 40 homes on the market a year ago to close to 150 now, she said.
Federal Reserve Chairman Ben Bernanke said in a question-and- answer session Thursday following a speech he delivered on banking in Chicago that the housing market, after flying high for five years, has lost altitude and appears headed for a safe landing.
"It seems pretty clear now that the U.S. housing market is cooling," Bernanke said.
"Our assessment at this point ... is that this looks to be a very orderly and moderate kind of cooling," Bernanke said.
The next few months could be key.
"These are strange times for forecasters and analysts. Are we heading into a market lull? Or are we seeing the beginning of a significant downturn?" said Marshall Prentice, DataQuick president. "Many of the fundamentals for housing are at a crossroads: Inflation, interest rates, demand, household incomes, prices and whether homes are a good investment compared to other investments. Summer is going to be interesting to say the least."
The Associated Press contributed to this report.
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