Bay Area Home Sales Soar: Will It Last?

In the San Francisco Bay Area, real estate sales were up in May, thanks to the increase in home purchases due to the tax credit rush. According to DQ News, sales for median to high end neighborhoods rose, helping take the median price for homes north of $400,000 for the Bay Area -- the first time in 21 months.

Good news to be sure, but is this just a one-month surge, or could this last?
"For now, at least, we're seeing a more normal mix of sales across the region and across price categories, thanks in large part to the state and federal tax credits coupled with incredibly low mortgage rates. It also appears that high-end financing is gradually loosening up," said John Walsh, MDA DataQuick president.

Median sales for all property types hit $410,000 in May, a jump of 10.8 percent from April, and 20.1 percent from May 2009.

The decline of sales for foreclosed and lower priced homes aided in the median price rising in May over the previous month and the previous year. Foreclosure resales were 27.3 percent in May, compared to 40 percent for May 2009.

Tim Gullicksen is an agent with Zephyr Real Estate. He specializes in residential real estate in San Francisco and says he would be more surprised if this trend continues.

"I am cautiously optimistic, but I am afraid it was just because of the tax credit. It did force competition where there might not have been before, which made prices go up. If it goes away, then we can be sure it was a temporary effect of the tax credit. It would be more surprising if it doesn't go away, if it sustains."

Gullicksen sees a lot of buyers out looking, and thinks pricing is making all the difference in properties selling or sitting on the market. He says there are two markets, one for properties priced right and one for those not.

"There are still a lot of sellers that are unrealistic. If you as a seller price it at a comparable sale price it will go in a week, which shows me there is a vigorous demand for buyers. Buyers don't play games in this market, it's a very price-sensitive market."

We will have to see if this was a blip or the start of a steady upward trend. However if Gullicksen's sales are any indication, things are brightening in the Bay Area and have been for a while.

"I have done more transactions so far this year than in all of last year."