Real estate sales dropped 15 percent in first-quarter 2006 and the listing inventory grew 65 percent compared to the same period last year in the San Francisco Bay Area, according to a report released this week by Prudential California Realty.
Consumer uncertainty and unseasonable rainfall contributed to the market slowdown, the company reported.
Meanwhile, prices were up 8 percent in the quarter compared to first-quarter 2005. “Buyers’ and sellers’ expectations were worlds apart as rising inventory levels and a ‘wait and see’ attitude among consumers afforded buyers more leverage than they had in several years. Overall, sellers were slow to acknowledge the power shift and the discord in the market affected sales as both sides adjusted to the new normal,” according to the report.
“Several factors contributed to the significant drop in unit sales in first quarter,” said Sherry Chris, chief operating officer of Prudential California Realty, based in Pleasanton, Calif.
“Consumers were learning to negotiate through the dynamics of a changing market after a long period of heated activity. This, combined with rainy, cold weather, which kept buyers from visiting open houses, worked to depress market activity.”
All counties saw a decrease in unit sales, and Napa and Contra Costa counties experienced some of the sharpest drops. Conversely, year-over-year increases on median prices were resilient, with some of the highest increases occurring in the most exclusive areas of the region, including Tiburon in Marin County.
The median price of a single-family home in Tiburon increased by 34 percent over first-quarter 2005, from $1.7 million to $2.3 million. And in the Pacific Heights/Marina area of San Francisco County a single-family home increased by 22 percent, from $2.7 million to $3.3 million year-over-year.
Chris said, “By the end of the quarter, consumers were regaining some of their confidence. Buyers and sellers had begun to establish the new rules of engagement, including contingencies, which will result in a more comfortable market atmosphere for both parties moving into second quarter.”
Median single-family home prices dropped 1 percent in San Mateo County in first-quarter 2006 compared to first-quarter 2005, Prudential reported, while increasing in eight other Bay Area counties that the company tracked, based on multiple listing service information.
Meanwhile, single-family median home prices grew most in Napa County (up 12 percent), Contra Costa County (up 10 percent), and Alameda County (up 9 percent) from first-quarter 2005 to first-quarter 2006.
Condo prices were up 24 percent in Santa Cruz County, 22 percent in Napa County while rising 1 percent in Sonoma County from first-quarter 2005 to first-quarter 2006.
Prudential California Realty agents participated in about 29,000 real estate transactions in 2005, and the company had $14 billion in annual sales for that year. Prudential California Realty, Prudential Nevada Realty, Prudential Texas Properties and Prudential Texas Realty together have about 5,000 agents and 139 offices.