California Home Loan, California Home Loans, Home Buyers, Refinancing, Equity Loan, Debt Consolidation, Refinance, New Purchase

Wed Sep 14, 2005 7:36 PM ET

By Jim Christie

SAN FRANCISCO, Sept 14 (Reuters) - The San Francisco Bay area's red-hot housing market showed no sign of cooling in August as home prices hit a new record high despite growing concerns about a looming slowdown, data released on Wednesday.

Spurred by continued low mortgage interest rates, prices paid for homes in the San Francisco Bay area rose to a new high and home sales in the region remained at near-record levels, according to the report by DataQuick Information Systems.

The median price paid for a home in the nine-county region, which includes the Silicon Valley high-technology hub, rose to $619,000 in August, an increase of 2.1 percent from July and a 19-percent jump from a year earlier, according to DataQuick.

"We're a bit surprised at how stable the market is in all categories. Usually one segment of the market will be outperforming the others. Right now, though, the same trends apply to all parts of the market from entry-level on up," said Marshall Prentice, DataQuick president.

"This stability means that the market will probably stay strong at least through the end of the year," Prentice said.

The continued gains in home prices in northern California come as home buyers turn increasingly to risky adjustable-rate and interest-only mortgage loans with large deferred payments, according to analysts.

From January through June, approximately half of the loans used to buy homes in the San Francisco Bay-area had interest-only components, compared with only 2 percent in 2001, according to LoanPerformance, a mortgage research unit of data provider First American Corp. (FAF.N: Quote, Profile, Research)

"I think it's gone up to the point that one should worry about how many people are betting on rising incomes or interest rates not going up much," said Cynthia Kroll, a senior regional economist with the University of California, Berkeley's Fisher Center for Real Estate and Urban Economics.

Home prices in the area, one of the strongest housing markets in the United States, have posted double-digit percentage increases each month for 21 consecutive months, the La Jolla, California-based real estate information service said.

According to DataQuick, 12,154 new and resale houses and condominiums sold in the San Francisco Bay area last month, marking an increase of 6 percent from the prior month and a decrease of 4.1 percent from a year earlier.

Year-earlier sales were the strongest of any August in the San Francisco Bay area, according to DataQuick's records, which date to 1988.