As Bay Area Homes Sales Plummet, Mixed News for Lamorinda, Walnut Creek

The bad news first. Bay Area home sales dropped 22.8 percent last month to the lowest level in 15 years as the economy "sputtered along," a real estate tracking firm has reported.

The housing market was also adjusting to life without federal home buyer tax credits, according to MDA DataQuick of San Diego.

Last month a total of 6,773 new and resale homes closed escrows in the nine-county Bay Area, down 19.1 percent from 8,373 in June and down 22.8 percent from 8,771 in July 2009. It was the slowest July since 1995, when 6,666 homes sold.

"There was more to last month's sales drop than expiring federal home buyer tax credits, but we think they were the main reason the decline was so sharp," DataQuick president John Walsh said. "As the boost from the credits waned, low mortgage rates just weren't enough to outweigh the weak economic recovery and low consumer confidence."

The median home price region also declined 2 percent to $402,000 last month from $410,000 in June, its first-month-to-month drop since April, although the median price last month was up 1.8 percent from $395,000 in July 2009.

Walsh said further price deterioration could be coming, as potential buyers wait to see whether the drop in sales translates into greater discounts.

Some mixed news on the housing market comes from looking at June 2010 sales figures for different East Bay  zip codes. These June sales figures are the latest available from the MDA DataQuck.

Two of Walnut Creek's zip codes—94595 and 94596—saw sales drop 15 and 27 percent respectively. But sales jumped 39 and 73 percent in the 94597 and 94598 zip codes. Overall, the median price for a home in Walnut Creek dropped 21 percent from the previous June to $408,000.

News about home sales was mixed in nearby I-680 communities as well.

Lafayette saw a 76.2 percent increase in sales in June; Orinda held steady but Moraga dropped 19 percent. The median home price in Lafayette dropped 7.7 percent to $946,250. In Moraga, it dropped 6.2 percent to $850,000. Orinda's median home price rose 13 percent to $1,055,000.

Walnut Creek real estate broker Kelly McCormick said colleagues and home sellers sometimes don't like to publicly admit that times are still challenging: "The reality is a hard thing to adjust to."

He says the real estate market is still in the midst of a major price correction, following that period in 2005, 2006 when everyone went "crazy" and homes were priced for more than they were worth.

His own sales have been a mixed bag. McCormick said he's had multiple offers for homes the first day they go on the market, and then he's had other homes waiting months to be sold.

Buyer confidence needs a boost from the return of jobs, McCormick said. But  people who are looking for a home will go for it if they perceive that they are getting a good value. "The good news is that there are still plenty of sales, but sellers have to adjust to a new reality," McCormick said.