Avante Real Estate – East Bay Real Estate Blog

East Bay Blog

April 25th, 2008 6:02 PM

It was bound to happen, yet I had my doubts... For a long time now I've seen property values in some of the hardest hit East Bay neighborhoods drop and continue to drop. In some of the hardest hit areas like Oakland, Antioch, and Richmond properties have dropped over 50% from their high. In some cases I've seen properties that just sold a couple of years ago, during the boom, going for 70% below what they had sold for. Up until now however, I had not seen any drop in the more expensive markets of the East Bay. Cities like Pleasanton and Danville seemed to be immune to what was happening in other areas. I am starting to see price reductions in these areas as well. Nothing like the drops we see in the hard hit areas, but I dare say prices in these cities are probably around 5% to 10% lower this year then last. Not a huge decrease percentage wise, but when you calculate that these homes have a much higher average price, this equates to tens of thousands of dollars.

I see two tempting opportunities for buyers in this market. First is for investors. Looking for break-even or positive cash flow? In the hard hit areas of the East Bay rents continue to be strong. All of those people walking away from mortgages have to move somewhere. They are becoming renters, and that is keeping rents high. With a lower purchase price and high rents, investors have a better opportunity now than they've had in years to put little down on a home and still have break even or positive cash flow. If you've got some money in the bank you've been waiting to invest, good for you, now is the time to start thinking about heading back into real estate.

The second opportunity I see is for move up buyers. If you've lived in your home for some time, you should still have a nice equity cushion. If you've been thinking about moving up into a larger home, now might be your opportunity to get into that neighborhood you've had your eye on. The prices have dropped a bit even in the best neighborhoods, and with more inventory you'll have more room to negotiate. If you can rent your current home and not have much negative cash flow all the better. This is the best market you could hope for. Keep your current house, rent it out, and move into the home you want.

Sellers: The truth is that if you don't have to sell in this market, don't. Buyers want to negotiate in this market. No matter what the asking price, you are going to get offers under asking unless you are trying to price your house so low that you expect "over asking" bids. That is a risky and foolish strategy in this market that is bound to backfire. The best you can hope for is asking price. I must say that I don't apply this to other areas of the Bay Area however. I am hearing that some neighborhoods in San Francisco are still fetching multiple offers. A weak dollar and foreign investors may have a lot to do with that phenomenon.

As always these are just my opinions based on what I am seeing in the East Bay real estate market. If you or someone you know need professional real estate assistance, don't hesitate to let us know, until next time...

Posted by Ted & Lucy Ramos on April 25th, 2008 6:02 PMPost a Comment (0)