The Bay Area housing market has followed the rest of the nation into double-dip territory.  After a surprisingly active winter with both eager banks and buyers, sales and listings have fallen back to record lows, reflecting an efficient market working out the distortions from last year’s government stimulus.  This was expected.  Looking past the headline numbers, we see that prices of regular sales have stabilized and are actually recovering.  $1M+ homes are holding up surprisingly well, showing that the well-to-do are doing just fine in this economy.  Meanwhile, lower priced distressed sales still dominate the market as investor appetite continues to be solid even as these transactions drag median prices down.  Unfortunately, prospective first time buyers have been scared out of the market, even if homes are now more affordable than it has been for generations.  This means that we’ll continue to see a growing proportion of lower-middle class workers struggling to pay for escalating rents to investors over the next decade.

Presentable properties are still attracting multiple offers.  Beside the emotional appeal of a quality property, buyers are efficiently factoring in the costs for additional repairs in distressed properties, which average 2.5x more.