Lack of Jumbo loans hit the Bay Area hard

The latest data from Dataquick for the Bay Area is out, and it's a new record: the lowest monthly sales in the 20 years the company has been tracking home sales for this region, with those requiring jumbo loans faring much worse than the conforming (under $417,000 market):

Bay Area home sales plunged below 4,000 transactions for the first time in over 20 years last month as the market remained hamstrung by the credit crunch and uncertainty among buyers, sellers and lenders. Price declines steepened, especially in inland markets hit hard by foreclosures, a real estate information service reported.

A total of 3,586 new and resale houses and condos sold in the Bay Area in January. That was down 29.2 percent from 5,065 in December, and down 41.9 percent from 6,168 in January 2007, DataQuick Information Systems reported...

The median price paid for a Bay Area home was $550,000 last month, down 6.4 percent from $587,500 in December, and down 8.5 percent from $601,000 in January last year. Last month's median was 17.3 percent lower than the peak $665,000 median, last reached in July, and was the lowest since February 2005, when the median was $549,000.

"There will be plenty of debate over the meaning of these extraordinarily low sales and the bigger drop in the median price. Some will insist demand has dried up in the absence of loose lending standards, with no turnaround in sight. Others will argue it's just a lull caused by temporary market turbulence, with brighter days just ahead," said Marshall Prentice, DataQuick president.

"What's clear to us," he continued, "is the credit crunch that struck in August had a sharp and immediate impact on Bay Area sales and median prices. The 'jumbo' loans the Bay Area relies on so dearly got pricier and harder to get, and their use has plummeted. The statistical picture could change quickly, though, if the government's effort to raise the conforming loan limit reignites $500,000-plus home sales. We could see significant gains in both our transaction totals and median prices."

Last month the percentage of Bay Area homes purchased with jumbo mortgages, or loans over $417,000, fell to 34.5 percent, down from 39.6 percent in December and down from about 63 percent before the credit crunch hit six months ago.

While last month's lower median price does reflect depreciation in the market -- especially in inland areas -- it also reflects the steep decline in sales of more expensive homes requiring jumbo financing. Purchases with jumbo loans have tumbled about 74 percent from a year ago, while those financed with conforming loans -- up to $417,000 -- have declined 29 percent.

All Homes	Number Sold Jan-07	Number Sold Jan-08	Percent Change	Median January 2007	Median January 2008	Percent Change
Alameda	1,279	780	-39.0%	$570,000	$487,750	-14.4%
Contra Costa	1,158	667	-42.4%	$550,000	$463,000	-15.8%
Marin	195	122	-37.4%	$830,000	$845,000	1.8%
Napa	98	44	-55.1%	$542,500	$532,500	-1.8%
Santa Clara	1,606	869	-45.9%	$660,000	$639,000	-3.2%
San Francisco	402	293	-27.1%	$750,000	$744,000	-0.8%
San Mateo	499	295	-40.9%	$735,000	$675,000	-8.2%
Solano	468	247	-47.2%	$430,000	$347,500	-19.2%
Sonoma	463	269	-41.9%	$510,000	$425,000	-16.7%
Bay Area	6,168	3,586	-41.9%	$601,000	$550,000	-8.5%

Source: DataQuick Information Systems, www.DQNews.com