SAN FRANCISCO ( DQNews) -- Bay Area home sales ended 2010 with little sense of direction as prices appeared flat to down a bit and sales were slow. Overall trends continue to be dominated by distress sales and bargain hunting, with lots of discretionary and move-up buying on hold, a real estate information service reported.

A total of 7,178 new and resale houses and condos were sold in the nine-county Bay Area last month. That was up 17.5% from 6,111 in November and down 8.3% from 7,828 in December 2009, according to MDA DataQuick. The San Diego firm tracks real estate trends nationally via public property records.

It's normal for sales to rise between November and December. On average, sales between those two months have risen 9.5% since 1988, when DataQuick's statistics begin. Last month's sales were 17.4% below December's historical average of 8,693 sales. Sales during June through November were weaker in terms of how far they were below average.

"Every period of market activity has its own set of characteristics, especially in the Bay Area. Sometimes it's move-up activity, sometimes new-home development in the suburbs, sometimes frenzied prestige or entry-level sales. Right now, most of what we're seeing are distress sales and bargain hunting, with a smattering of discretionary buying," said John Walsh, DataQuick president.

"While the dicey economy and employment concerns are major factors, tight mortgage credit is also a big issue right now, especially for the upper half of the market. There's a lot of pent-up supply and demand out there, which will start to meet when the lenders re-open their spigots a turn or two," he said.

The median price paid for all new and resale houses and condos in the Bay Area was $375,000 in December, down 1.3% from $380,000 for both November and December one year ago. The peak of the current cycle, $665,000, was reached in June/July 2007, while the median hit a low of $290,000 in March 2009. Around half the peak-to-trough drop was the result of a decline in home values, while the other half was a shift in sales mix to lower-cost homes.

Last month 33.2% of all sales were for $500,000 or more, down from a revised 36.3% in November and the lowest since 33.1% last February. The all-time low was January 2009, when 22.7% of sales crossed that threshold. Over the past decade, a monthly average of 44.9% of homes sold for $500,000 or more.

Viewed differently, sales of existing single-family houses in zip codes representing the top one-third of the market, based on historical prices, accounted for 35.1% of all sales in December. That was down slightly from 35.3% in November and up from 34.7% a year ago. Those higher-end areas' contribution to regional sales had dropped to as low as 18.0% in January 2009, while the peak was 44.7% in July 2007. The 10-year average contribution is 35.6%.

Last month foreclosure resales - homes that had been foreclosed on in the prior 12 months - rose for the fifth consecutive month to 30.8% of the Bay Area's resale market - the highest since last March. December's figure was up from 28.6% in November but down from 32.0% in December 2009. Foreclosure resales peaked at 52.0% in February 2009. The monthly average for foreclosure resales over the past 15 years is about 8%.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 23.7% of all home purchase mortgages in December, down from 23.9% in November and 25.0% in December 2009.

Sales of higher-cost homes continue to suffer from the credit crunch that struck three years ago, making adjustable-rate mortgages (ARMs) and "jumbo" loans much more difficult to obtain.

In December, 9.1% of the Bay Area's home purchase loans were ARMs, down from a revised 9.9% in November and up from 7.9% a year ago. The Bay Area's average monthly ARM rate over the last decade is 53%. ARMs hit a low of 3.0% in January 2009.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 31.3% of last month's purchase lending, down from a revised 33.4% in November, and up from 29.9% in December 2009, and a post-housing-boom low of 17.1% in January 2009. However, before the August 2007 credit crunch, jumbos accounted for nearly 60% of the Bay Area purchase loan market.

Last month absentee buyers - mostly investors - purchased 18.7% of all Bay Area homes sold, compared with 17.0% in November and 17.9% a year ago. The monthly average since 1988 is 16.5%.

Buyers who appeared to have paid all cash - meaning there was no corresponding purchase loan found in the public record - accounted for 24.3% of sales in December, compared with 25.0% in November, 23.6% a year ago and an average of 11.5% going back to 1988.

Home flipping trended lower in November, when 2.1% of the homes that sold on the open market had been bought and re-sold within a six-month period. That was down from a flipping rate of 2.7% in November and 2.3% a year earlier. Last month's flipping rates varied from 0.8% in San Francisco to 2.9% in Contra Costa County.

San Diego-based DataQuick Information Systems monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda and San Mateo counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,558, up from $1,504 in November, and down from $1,619 a year ago. Adjusted for inflation, last month's payment was 41.6% below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 56.9% below the current cycle's peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but below peak levels reached over the last two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above average, MDA DataQuick reported.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.