And now for the next chapter in the continuing saga of the national real estate slump. California Association of Realtors reports that sales decreased 24.7% in June as compared with June of 2007. The median price, meanwhile, was up slightly, increasing by 3.2% in June as compared to May of this year. So what does this mean?

“The focus on foreclosures and subprime lending is ongoing and, coupled with higher inventories of homes for sale, is prompting many would-be buyers to play a ‘wait-and-see’ role,” said C.A.R. President Colleen Badagliacco. “However, well-maintained homes with curb appeal that are priced for today’s market continue to sell. It’s often a matter of counseling buyers and sellers to set realistic expectations on both sides of the transaction.

“First-time buyers continue to be impacted by tighter mortgage underwriting standards and the affordability challenge, which has not improved significantly despite price declines in most regions of the state,” she said.

However, remember this is for the whole state of California, including Southern California, which is softer than the bay area, and the Central Valley and Sacramento markets, which are in a deep slump.

“With just over a 10-month supply of homes for sale on the market, we expect further softness in prices in the coming months,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The San Francisco Bay Area continues to see leaner inventory levels compared to Southern California and the state as a whole.

“Unlike the downturn we experienced in the early 1990s, the sales decline is not driven by weakening economic conditions,” she said. “Both the California and U.S. economies continue to expand.”

Certainly, while local market conditions for Pleasanton, Dublin, and the Tri-Valley are sluggish, the market is not depressed, and in fact it is healthy when compared with other parts of the state and the country. There remains fairly steady sales, and inventory, while at a seasonal high, is still not excessive my any measure.

Meanwhile, new home builders, not to be outdone by their resale counterparts, announced today that new home sales nationally were down 6.6% in June, which was about three times the decline analysts expected. In the West, sales of new homes were off 22.5%, which is not good news. Nationally, the median home price also declined 2.2% from a year ago.

And to complete the trifecta, the National Association of Realtors announced that sales of resale homes declined 3.8% in June to the lowest level in 5 years.

Again, it is time for a sense of perspective here. Yes prices have eroded since 2005, in some markets by as much as 15%. But prices rose by 30 to 40% prior to that. And again, the prime bay area markets, such as the peninsula, South Bay, Marin, and Pleasanton, Dublin and the Tri-Valley, are doing much better than the rest of the state, and indeed the rest of the country. And if there were ever a market to buy in, this would be it.

Now back to reality…

Courtesy of California Association of Realtors and Yahoo News

The Pleasaton real estate market in June was not markedly different from June. Sales activity was generally in line with recent months, but up slightly. There were 67 pending sales in June, compared with 61 for the month of May. Inventory was up slightly, with 195 homes on the market at the end of June, up slightly from 191 homes at the end of May. Overall, market conditions continued to be steady but sluggish, with some price brackets and neighborhoods seeing very slow activity, and others faring better (click on graph to enlarge)

The under $1 million market in Pleasanton was almost unchanged in June as compared with May. Inventory ended the month at 91 homes on the market, up from 89 at the end of May. Pending sales were identical at 45. (click on graph to enlarge)

The mid-range market in Pleasanton ($1 million to $2 million) showed steady inventory, with 63 homes on the market at the end of June, which is unchanged from the end of May. Pending sales increased from 12 at the end of May to 17 at the end of June. Several price reductions in this price range helped to spur an increase in sales. (click on graph to enlarge)

The luxury segment (over $2 million) continued to struggle, with inventory up from 39 at the end of May to 41 at the end of June. Pending sales increased slightly from 4 at the end of May to 5 at the end of June. (click on the graph to enlarge)

Overall, the market remains mostly sluggish. Prime properties in excellent locations with strong amenities such as location, view, upgrades, and appeal will still fare well as long as the price is attractive. Homes with location difficulties, lacking upgrades and appeal, or priced too high will find current market conditions to be tough sledding, as demanding buyers are looking for value, and are content to wait until the right house comes on the market. Inventory will continue to be an important factor… strong increases in inventory will put more downward pressure on prices in Pleasanton. So far, inventory has remained relatively stable, and below the levels of last year.

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Good news on the economic front… the US added 132,000 jobs in June, and added more in April and May than previously estimated. Unemployment held steady at 4.5%. This is significant because it provides further evidence that the national real estate slump is not having a big impact on our economy.

“Today’s report adds to the evidence that the economy bounced back in the second quarter, probably to the 3.0 to 3.5 percent range, from the anemic 0.7 percent GDP (gross domestic product) growth rate in the first quarter,” said Nigel Gault, economist at the research firm Global Insight.

Economists consider job creation a leading indicator of economic momentum, with a benchmark of between 110,000 and 140,000 jobs new jobs needed each month to absorb growth in the number of people seeking work.

There is some concern, however, that the continued strength in the economy might prompt an interest rate hike in the near future, as the Fed will want to prevent an increase in inflation by hiking short term rates. (yahoo news)