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The Bay Area real estate market continued to show improvement in November due to fewer sales of bargain-priced foreclosed homes and more sales of higher-priced properties.

According to a report released Thursday by MDA DataQuick of San Diego, the median price paid for a home in November was $387,000, an 0.8 percent decrease from October, but up 10.6 percent from November 2008. Last month’s median price was the second consecutive month that saw home prices rise on a year-to-year basis since two years ago. The median is the point at which half of the homes sell for more and half sell for less.

But whether that pattern will continue into next year is unclear. A large inventory of foreclosed properties may come into the market in the coming months if a large number of loan modifications that have delayed foreclosure proceedings for borrowers end up failing, say observers.

Also, unemployment is rising and adjustable-rate loans are resetting, which are prime ingredients for foreclosure activity, which in turn pushes prices down.

First American CoreLogic released a report Thursday that said in the third quarter an estimated 1.7 million homes nationwide make up what’s known as the “shadow inventory.” That’s a term for bank-owned foreclosures and homes in danger of becoming foreclosed that have not been put on the market. A year ago, shadow inventory accounted for 1.1 million homes.

But for now, things are better than at the start of

the year when foreclosures in February reached a peak of 52 percent of existing homes sales, said the DataQuick report.

Last month, that number was 32.5 percent of all resale activity in the nine-county Bay Area. Also, homes that sold for more than $500,000 accounted for 36.5 percent of November’s transactions, up from 31.3 percent in November 2008 and from this year’s low of 22.7 percent in January.

A total of 6, 878 new and resale houses and condos changed hands last month, a 13.3 percent drop from October, but up 19.5 percent from November. A sales drop from October to November is normal.

“Financial distress is still a problem with many borrowers, but for now cheap foreclosures have lost their leading role in this housing drama … A lot of people sense lenders are holding back, and there’s at least one more round of foreclosures lurking around the corner,” said John Walsh, president of MDA DataQuick, said in a written statement.

Chris Thornberg, a principal with Beacon Economics, said loan modification efforts amount to policy moves that are just delaying the foreclosure process.

“They’ve sort of tied a rubber band around the end of a hose. It just swells into a big balloon of water behind the nozzle. At some point in time, those are going to have to be turned out and put in the market,” he said. “It goes back to the idea that we have not really fixed the housing market … The fundamentals say that these should have hit the market.”

Last week, the Treasury Department released a report that said only about 4 percent of nearly 760,000 borrowers nationwide who have signed up for loan modification under the Obama administration’s foreclosure prevention program have received a permanent loan modification. In California, 148,350 borrowers have either a temporary or permanent loan modification since the program began in March.

Last month’s Bay Area median price of $387,000 was 33.4 percent higher than this year’s low point of $290,000 that occurred in March, but 41.4 percent lower than the $665,000 peak reached in June and July 2007.

In Contra Costa County, the median sales price for a home was $290,000 in November, a 9.4 percent gain from a year ago.

“We are really starting to see the high-end loosen up. Obviously, the borrowers have to be well qualified, but we are starting to see more financing.” said Robin Dickson, executive vice president of J. Rockcliff Realtors, an East Bay brokerage.

Another reason that median prices are up from a year ago is that there are fewer short sales and bank-owned foreclosure in the marketplace now, she said.

Still, she would not be surprised to see more foreclosures come into the market next year.

“We know they are out there but the banks are hanging on to them for now,” Dickson said

“I don’t think they are going to dump them on the market. That would devalue their own properties.”

In Alameda County, the median sales prices was $363,000 in November, up 1.8 percent from a year ago. In San Mateo County, the median price was $587,550 in November, up 1.2 percent from a year ago.

Denise Aquila, a Realtor with the San Carlos office of RE/MAX Today, has this observation as to why the Peninsula saw only a slight increase in the year-to-year median price.

“We never really experienced a huge glut of inventory and we never had the mass number of foreclosure and short sales like in some of the other Bay Area counties,” she said.

Reach Eve Mitchell at 925-952-2690.