Home prices improved substantially as the percentage of San Francisco distressed properties for sale dropped in number in May.
For the first time in nearly 24 months, the median price in the Bay Area surpassed $400,000, as sales of higher-priced houses increased and sales of foreclosed homes and lower-priced fixer upper houses dropped.
The median price for previously owned single-family homes jumped up to $434,000 in May, an increase of 8 percent from the preceding month.
Sales of higher-priced homes – those priced above $500,000 – spiked by almost 34 percent year-over-year, as more lenders started to offer jumbo loans again. Sales of houses priced above the $417,000 conforming limit made up 35 percent of total house sales in May, up from 25 percent in May last year and from 32 percent in the preceding month.
In contrast, sales of housing units priced lower than $300,000 dropped by almost 23 percent compared to May 2009, as the inventory of San Francisco distressed properties for sale decreased.
Nonetheless, lower-priced purchases by first time buyers still accounted for a big part of total sales. Almost 25 percent of total Bay Area house sales in May were financed by FHA loans, which is the usual financing option used by first time homebuyers as the down payment minimum is only 3.5 percent.
Additionally, the $434,000 median price in May was still far below the peak median price of $665,000, which was reached in June 2007.
Local analysts said that the two main factors that helped improve the Bay Area housing market in May were lower mortgage rates and the federal tax credits, whose market effects are still being experienced because the deadline for closing was extended from June 30 to September 30.
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