East Bay Blog

Hello East Bay Real Estate Blog readers. Unless you live in a bubble, you’ve probably heard something about the real estate market in the media today. We got the existing home sales numbers for June today and Bay Area Foreclosure numbers were also out for last quarter. Here is my take on what was reported today:

Existing Home Sale for June down 11.4% to 2002 levels

So this sounds pretty horrible and if you read any of the major news sites they tend to make it sound like there is even worse news yet to come. Well first of all, with all of the bad news I’ve been hearing about real estate over the last several months I would have thought we were in the worst market since 1989. 2002 was not that long ago, I don’t remember hearing anywhere near as much bad news about the real estate market in 2002 as I am hearing now. If homes are selling at the same pace as 2002, that’s not bad. What makes the media say it’s so bad is that compared to the last 4 years we are down quite a bit. Let me tell you, the last 4 years were not a normal market, and we are not going to see a market like that again for a long, long time. Perhaps not even again in our lifetime. Homes don’t normally double in value in 5 years like many homes did recently. We are probably going to see a flat market for quite a while. So if you are a buyer, what are you waiting for? If you think prices are going to drop even more from here, it will probably depend on where you are looking to buy, read on…

Median Sales Price of existing homes in June up 0.3% from a year ago.

At first glance this does not seem to make sense. How can prices be going up with all of the bad news we are hearing? The median price gains are a result of the sub-prime mess that some unscrupulous lenders caused over the last couple of years. Nice homes, in nice neighborhoods are still selling. They may not be appreciating in price for the time being, but mostly homes in more expensive neighborhoods are now seeing flat pricing. Buyers for these types of homes should make a move now. With all of the negative media, they are able to better negotiate terms. Homes in lower priced neighborhoods are a different story. These homes are not selling as quickly. These properties are still seeing price corrections down. The reason is many of the sub-prime borrowers who purchased homes in the last several years purchased in these areas. Now that their rates have fully adjusted they cannot afford their loans. Many of these homes are now on the market. More competition means lower prices. In addition, with tightening lending standards, people who would want to move into those homes now are not able to find a lender willing to lend. In these areas the market could still get worse. The Bay Area Foreclosure numbers that recently came out tend to confirm this fact, keep reading…

Bay Area Foreclosures for 2^nd quarter hit highest level in two decades.

Now this is bad news, but again it depends on where you live. Statewide homeowners received the most mortgage-default notices since the fourth quarter of 1996. What I think is the worse news is that the number of trustee deeds issued rose 800% from this time last year. From 1,936 a year ago to 17,408 this year, that is a huge increase. A trustee deed is issued when the bank actually takes back the deed to the house. In the past when default notices were issued, a seller would refinance or sell their home. Now with tightening lending standards and a soft resale market, those homes are going back to the banks. That is why we see the huge increase in trustee deeds. Again, these foreclosures can be traced to the lower priced neighborhoods. In the Bay Area foreclosure report, the three counties with the least likelihood of default notices were: Marin, San Francisco, and San Mateo. These are probably some of the most expensive areas in the Bay Area. The same can be seen in the East Bay, where the more expensive neighborhoods are holding up better then the less expensive ones.

The take away from today’s blog might be that depending on where you are looking, it is probably a good time to make a move. If you are looking at a more expensive neighborhood, prices are going to be pretty flat. You can leverage all of the bad news in the media to try to get the best deal possible. In the lower priced neighborhoods, now is the time to start bargain hunting. The bad news is out, and working with the right agent, you should be able to find those diamonds in the rough. Now more than ever, whether buying or selling it is important to have a qualified professional on your side to help guide you through this market. Realtors® must be aware of not only the local market conditions but also the macroeconomic conditions that are pushing the overall real estate market. Until next time…