California home sales fell in February

By Alex Veiga
ASSOCIATED PRESS

3:11 a.m. March 17, 2006

LOS ANGELES – Home sales declined statewide in February and the rate of price increases slowed, a reflection of growing pressure on sellers to dial back prices to lure increasingly tentative buyers.

In all, 37,900 new and resale houses and condominiums were sold last month, a 9.3 percent decline from 41,800 in February 2005 and a drop of 1 percent from January's sales, real estate research firm DataQuick Information Systems reported Thursday.

The state has seen annual home sales decline for five straight months. Last month's sales were the lowest since 32,454 homes were sold in February 2001, the report said.

February is traditionally a slow month, and comparisons to last year could be misleading because it was such a strong year.

“It appears that today's market is probably as close to what we would call normal as we've had in a long time,” said John Karevoll, a DataQuick analyst.

Still, the slowdown in sales also reflects the tussle between buyers and sellers as the housing market continues to level off from a five-year climb.

“What I'm seeing is both buyers and sellers digging their heels in, buyers saying 'I'm not ready to buy' and sellers going 'I'm not going to lower the price,'” said David Kerr, a Realtor with Emeryville-based ZipRealty Inc.

“A lot of sellers are still pricing to the higher-end and their properties are still sitting there, and they're not considering realistic offers,” said Kerr, whose territory includes Oakland and Berkeley.

The median home price in California last month hit $457,000, up 1.1 percent from January and up 12.3 percent from $407,000 in the same period a year ago. It marks the lowest annual increase since 10.7 percent in December 2001, DataQuick said.

Statewide home price increases peaked in June 2004 at 23.2 percent and that rate has gradually declined ever since.

DataQuick released figures Thursday for the nine-county region surrounding San Francisco Bay. Sales in the area were down 16.8 percent in February compared to the same month last year but up 3.4 percent from January, according to DataQuick.

The median price of a home in the region in February was $616,000, up 12.2 percent from $549,000 a year ago and up 1.5 percent compared to January.

In a six-county area of Southern California, the number of homes sold last month also fell, DataQuick said earlier this week.

In all, 19,905 homes were sold during the month, a 7 percent drop from the same period a year ago and down nearly 1 percent from January.

The median home price in the region hit $480,000 last month, up 12.9 percent from February 2005 and up 2.3 percent from January, DataQuick said.

One factor behind the apparent disconnect between buyers and sellers involves the standard practice of using sales of comparable homes to set an asking price.

Such comparisons are typically made with homes sold within a six-month period. But in many cases, the prices that homes fetched a half-year ago don't square with many buyers' perceptions of where the market is headed.

“Sellers do not recognize what's going on in terms of the market transitioning,” Kerr said. “They still think that because the house across the street sold for like $50,000 to $100,000 more than theirs, that theirs should be worth that, plus some. And what's happening is, it's not happening.”

Dale Hansen, a computer technician in Fairfield, listed his four-bedroom, two and a half-bath home for $665,000 in early January but took it off the market last month after only receiving offers well-below his asking price.

As a result, Hansen and his wife fell out of escrow on a condominium they were looking to buy after selling their home.

“We had a lot of traffic, a lot of interest,” said Hansen, 31. “A lot of people are coming in $20,000 to $25,000 right off less than what we're asking for.”

The couple asked their real estate agent to hold firm on the price. They plan to relist the home next month.

“We went into this whole thing knowing it's not the best time of year to sell, but we wanted to go ahead and give it a shot,” Hansen said. “We'll cross our fingers and hope it goes well.”

Despite the market's cooldown in recent months, some buyers say it's still tough to find the right property in their price range.

Mathew Moses, an environmental engineer from Berkeley, has been searching for a home in the $500,000 to $600,000 range since December but hasn't found anything to compel him to make an offer.

“The stuff that I'm looking at is way overpriced,” said Moses, 31.

Still, Moses says as long as interest rates don't rise too high, he can wait for the right deal.

“I think it could be helpful if I don't find anything ideal for me and wait another six months,” he said. “I'm willing to do that.”