San Jose

Bay Area Home Prices Continue to Slide: Study

A strong economy, low unemployment, and a booming stock market.

So this next statement may surprise you: There is new evidence that the demand for Bay Area homes is cooling and prices keep falling.

If you're in the market to buy a home in the Bay Area, here's some good news from data analytics company CoreLogic. According to the company's latest research, home prices in most Bay Area counties are falling.

The median sales price for new homes dropped 7.1% In addition, previously sold homes saw a price drop of 4.7% compared to last year.

"I think the immediate trigger a year ago was the run up in mortgage rates," said Dr. Frank Nothaft, a chief economist at CoreLogic. "Mortgage rates got posted about 5% a year ago and that put up a chill on all potential buyers in the market place. When mortgage rates go up, that means the monthly mortgage payment is just taking that much bigger of a bite from family income."

San Jose-based realtor Holly Barr said she has seen prices sliding for more than a year now.

"If you look at the trend over the last two years, it's definitely come down," Barr said.

In her market of Willow Glen, Holly's gotten less "all cash" buyers and seen clients' homes sit on the market for an average of 25 days before a sale. A couple years ago your home would likely sell in less than 10 days and you would get several hundred-thousand dollars over asking price.

"If it's in a beautiful neighborhood, all fixed up, highly desirable property, you will get multiple offers," Barr said. "It may not be the numbers we saw two years ago, probably won't go crazy over asking, but you'll maybe get two or three right around the asking price."

In September this year, CoreLogic reports the median sale price for all homes in the Bay Area was about $778,000 -- down from $815,000 last year.

Another study may offer another reason why prices are sliding. A San Francisco city survey reports that 35% of residents want to leave the city in the next three years.

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