csua.org/u/as3 -> sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/01/20/BUGCEAT5FP1.DTL
SFGate Technology: It's a high-tech world - - we just plug you int o it... Despite earlier forecasts of softer housing demand in 2004, low interest rates drove the Bay Area real estate market to record levels last year. The median sale price of a single-family home in 2004 was $532,000, a 17 percent rise over $455,000 in 2003 and the highest for any year since 19 88, real estate information firm DataQuick reported Wednesday. A total of 134,848 houses and condos changed hands in the nine counties i n 2004, blowing past the previous peak of 122,149 set in 2003. Few housing experts expect a repeat performance this year, amid persisten t geopolitical uncertainties and signs that interest rates are poised to rise. "This year is going to be different," said John Karevoll, a researcher at DataQuick in La Jolla (San Diego County). December, a traditionally a slow time for real estate sales, closed out 2 004 in strong -- although not record-setting -- fashion. The median pric e for a single-family home hit $554,000, a 17 percent jump over the Dece mber 2003 median. The total number of houses and condos sold was 11,068, 25 percent below the level of 11,354 a year ago, the highest tally for any December in at least 16 years. In the face of ant icipated interest rate hikes, many economists had predicted that local a nd national real estate markets would cool. But after mortgage rates ros e for several weeks in the spring, disappointing job growth reignited fe ars about the economy, driving rates lower. The uncertainty created by b oth rising and falling rates prompted buyers to jump into the housing ma rket. "I was feeling pressure because when I made the offer, rates were going u p," said San Francisco lawyer Ken Sperandio, who bought a 1925 Sunset Di strict home in June. Sellers relished the rush of buying activity -- particularly if their equ ity allowed them to trade up to a bigger, better home. In the early mont hs of 2004, multiple offers on homes were common and some buyers made co ntingency- free offers, which, because they dispense with items like loa n approvals or inspections, heavily favor the seller. Other sellers decided to get out of the market altogether. After owning h is Cloverdale home for barely three years, George Brenegan, 69, sold it early in 2004 and plowed the $210,000 profit into stocks and other inves tments. The retired teacher is happy living with his daughter and her fa mily in their large home in Santa Rosa, where he hopes to add a 1,000-sq uare-foot, three- room in-law unit. However, Brenegan added, "I sold myself out of the market. Economists worry that higher mortgage rates this year could restrict buye rs' spending power and clamp down on the Bay Area housing market. Karevoll expects appreciation rates to ease from the mid- to high teens t o the single digits once the benchmark 30-year fixed mortgage rate climb s closer to 65 or 7 percent later in the year. Last week, mortgage gian t Freddie Mac said the 30-year fixed rate hit 574 percent, down from 5 77 percent. But others, like UCLA economist Christopher Thornberg, believe a more dra stic correction could be in the works because of the Bay Area's continue d falling rents and lackluster job and population growth. "People are buying strictly on the basis of price appreciation, and that' s a recipe for disaster," Thornberg said. The question now is when do we start coming down the other side?"
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