Survey: Despite slowdown, Bay Area home sellers make tidy profit
By Eve Mitchell, BUSINESS WRITER
Article Launched: 04/12/2007 02:48:41 AM PDT
WITH HOME appreciation rates hardly budging over the last year, you might think homeowners are getting a raw deal when they sell. Not so. Most Bay Area homeowners who sold a house in February made a hefty six-figure profit, a new survey shows.
How much? Sellers made a median profit of $290,000, or a 74 percent gain, when they turned the keys over to the new owner. That translates into a median sales price of $680,000 on a house typically purchased 67 months earlier for $390,000, according to the survey from First American CoreLogic, which compiles data on property ownership.
The survey compared the February median sales price of existing single-family houses with the house's previous median price in the Bay Area and five Southern California counties. The median price is the point at which half sold for less and half sold for more. The survey also calculated a median for the number of months between sales.
All told, 58 percent of Bay Area sellers made a profit of at least 50 percent when they sold their home, and 42.4 percent made a profit of at least 100 percent, the survey found. On the other end of the spectrum, 5.9 percent of sellers lost money on the transaction.
"Almost all the people who lost money held for three years or less," said Christopher Cagan, director of research and analytics at First American CoreLogic. "This tells us that residential real estate is somethingfor the long term, which is what it is supposed to be. The point of getting
house is for a place to live ... for several years. And people who do that will generally do well when they sell."
Although most sellers did well, the yearly double-digit appreciation gains of the red-hot market of two years ago are over for now. From February 2006 to February 2007, the median sales price for an existing single-family house in the Bay Area climbed 2.3 percent to $744,250, according to the California Association of Realtors.
Still, most sellers of single-family houses
A Price Reduced sign is posted at a home for sale in Palo Alto, Calif., Wednesday, April 11, 2007. For the first time since at least The Beatles were still together, the median price for an existing home is expected to drop this year. The housing slump is in overdrive: On Capitol Hill, lawmakers warn local economies could be hurt by rising foreclosure rates. And a Boston-based nonprofit group says it has $1 billion from Citigroup and Bank of America to help refinance at-risk mortgages. (AP Photo/Paul Sakuma) in Alameda, Contra Costa and San Mateo counties who sold a house in February 2007 made a hefty profit, according to the survey.
In Alameda County, the median sales price was $645,000, or 63 percent higher than the $396,000 median price of a home typically bought 64 months ago. The survey said 55.4 percent of sellers made a profit of at least 50 percent, 40.3 percent made a profit of at least 100 percent and 6.9 percent lost money.
In Contra Costa County, the median sales price was $575,000, or 60 percent higher than the $359,500 median price of a home typically purchased 61 months earlier. Some 58.2 percent of sellers made at least a 50 percent profit, 41.4 percent made at least a 100 percent profit and 6.7 percent lost money.
In San Mateo County, the median sales price was $814,000, or 55 percent higher than the $524,000 median price for a home typically bought 69 months earlier. Some 56.5 percent of sellers made at least a 50 percent profit, 43.1 percent made at least a 100 percent profit and 7.1 percent lost money.
The survey did not take into account costs associated with selling a house, such as a real estate commission, which can typically be 6 percent of the sales price. Also, the survey did not include the number of homes sold.
In the Bay Area, home sellers live in a single-family house for a median of nine years before selling, or three years longer than the statewide median, according to the California Association of Realtors. The annual appreciation rate is 7.8 percent in the Bay Area and 7.2 percent statewide based on statistics going back to 1983, according to the association.
Sellers who stay in a home at least five years are likely to have a good return when they sell, said Larry Klapow, president of San Ramon-based Coldwell Banker Residential Brokerage in the Bay Area.
"You usually see a nice appreciation over that time when you start looking at real estate as an investment compared to other things," he said.
In Southern California, San Bernardino County had the highest profit gain in percentage terms of single-family house sales. There, the median sales price was $370,000, a 104 percent increase from a $181,750 median price for a home typically purchased 48 months earlier. Riverside County had the lowest percentage gain, with a median selling price of $410,000, or 55 percent higher than the $265,000 median price of a home typically bought 42 months earlier.
Contact Eve Mitchell at (510) 208-6474 or emitchell@angnewspapers.com.
