Median Homes for the Bay Under $300K (San Francisco, San Mateo: short sale, real estate)

[bayarea-girl]

I've been noticing foreclosures in Blackhawk, Pleasant Hill, Walnut Creek, tons in Oakland, Pinole, Richmond, tons in Hercules, tons in Concord, San Leandro, Castro Valley and across the board I've seen homes prices come down with the exception of Berkeley & Piedmont areas (even the Lafayette/Orinda area is coming down). I haven't looked too much in SF as I live in the East bay. If anyone is selling their home right now it is because they have to.

Even in the affluent areas who can afford the homes? Lending of course will soon continue and the government is tossing around all kinds of money to get people in the buying mood. But will jumbo loans and subprime loans continue? What about equity lines? Maybe I am missing the bigger picture but now a days instead of having 0% down you need 20% down and excellent credit and at this time people are loosing their jobs or are not getting raises. In the news they've been saying don't expect those big salaries any more. So I'm confussed I just thought prices would have to go down more to accomodate what is really happening with the market, even in the affluent areas.

[Tallysmom]

[quote=artemis78;7966279]

Originally Posted by PeixeGato

This could mean that the next house on the list above the house that is at the "median" price of $300K is $650K and you have a whole bunch of properties in the $275K - $300K range that are complete dumps located in really bad areas../quote]

....and in this case, that's exactly what it means. A lot of the "sales" are actually foreclosures where the bank is taking title for the value of the loan. Add to that the number of foreclosures that are being sold at auction (or are stripped and being sold on the open market, etc.) at extremely discounted prices, and you've got a big group hovering near the bottom, and then a gap, and then a less affected market at the higher end. (Not unaffected, of course, but there are fewer problems with inventory pileup and bank-owned properties in the more stable neighborhoods across the Bay Area that have not been as badly hit by the foreclosure crisis.)

It's more telling to look at data that exclude properties where a bank is a buyer or seller. Prices are still down, but less than you'd guess based on the medians. That said, I think we'll continue to see downward pressure on prices across the board as long as the credit markets are frozen and the foreclosures are piling up. Watch for a shift in notices of default, and then a slowdown in actual foreclosures; that's when we'll begin to come out of the dive.

The slowdown appears to be happening -- at least in my zip code. The last time I looked, at least 6 months or so ago -- nearly 95% of the homes in my zip (94603) were in foreclosure of some sort, and according to another website the number of home being foreclosed on was around 850.

Now it appears that the numbers have fallen to 650, and the percentage of foreclosures to home sales is now 90%.

That's about the only silver lining I can see... the prices of the homes have beyond tanked. The Durant Square homes were selling in the low 400's and now some of the condos are selling for 135K,.. and sitting and sitting. Homes on my street are seeing prices that are under 100K.... and regardless of the condition of them, all that is doing is putting more downward pressure on prices.

We bought in 1987 and some of the prices are rivaling what WE paid... now THAT sucks.

[City Boy]

So are the banks now giving more loans to people? Who are buying these homes now?

[PeixeGato]

Originally Posted by City Boy

So are the banks now giving more loans to people? Who are buying these homes now?

From what I've heard, the banks are still hesitant to loan the money. Loan qualification standards have gone up (maybe to where they should've been all along, but that's another issue) and this is part of the reason the market continues to experience downward pressure.

[gobruins]

Why is it so difficult to believe that there are people out there who can afford homes in affluent parts of the Bay Area? I'm not saying this is a large part of the buyer population, but you might be surprised how many people can actually afford Palo Alto, Lamorinda, and Marin. There are many dual income couples out there who are working high-paying jobs and have been good with their money. They CAN afford homes in these areas.

As for this article on median home price.... I really do not understand why people pay any attention to median home prices. They really don't tell you much & can be very misleading. I am not here to say that the Bay Area real estate market is hot.... it's not. But this median home price statistic is giving buyers a very false sense of how "affordable" many areas are and it's giving people the idea that the Bay Area is crashing and burning. It isn't in many affluent areas.

If sellers in affluent neighborhoods are holding out for high bids I am not surprised. There ARE buyers out there who can make the payments.

[Tallysmom]

Originally Posted by City Boy

So are the banks now giving more loans to people? Who are buying these homes now?

If your credit is STELLAR, and your job is secure and long standing and (if you are buying) you have a downpayment of at least 10% to 20% -- or if refi'ing you aren't taking cash out -- you stand a very good chance of getting a loan.

Self employed people have harder time to get a loan anyway. Often they do their taxes to not show a profit, even though they make money, in order to mitigate paying lots in taxes. That was the intent of the NINJA loans at first -- to help self employed people that might not look good on paper but that could easily make the payments get a loan. At this point I would probably have to give them three to four years of tax returns (we're self employed, but we show a profit yearly) to refi.

But if your credit isn't primo, forget it. If you just started a new job, forget it.

[clongirl]

I'm of the mindset that house prices MUST adjust to the median salary of the area.Anyone familiar with Housing Crash Continues, Bubble Pops would know that prices must reflect this basic economic principle. The banks are not lending money to people without proof of steady income, high FICO scores, and at LEAST 20% down payment. People that might have had huge holdings in the stock market no longer have that kind of cash anymore..many people are down 40%.

I've been watching houses in my area (Lamorinda) sit on the market for over a year now...everyone I know is uncertain about the stability/security of their jobs and this is within some of the "safer" high tech companies/positions in Silicon Valley. I can tell you personally that many VPs and higher level people at my husband's company are very worried about losing their jobs. I doubt they are even remotely considering purchasing houses now.

When I first moved back from abroad 2yrs ago, there were 2 houses under my very maximum price range in Lamorinda..now there are over 40, including many foreclosures and short sales.

[gobruins]

I agree that there is a lot of uncertainty right now. I know of 3 buyers who are actually looking in Orinda and Lafayette. They have been pre-approved and are *ready* (so to speak) to buy, but they are waiting it out a bit to see what happens with the economy. These particular people aren't actually waiting for prices to come down, but it's a psychologically nerve-wracking time and so unless you have to buy or sell, everyone seems content on staying put for a while.

[City Boy]

Originally Posted by gobruins

Why is it so difficult to believe that there are people out there who can afford homes in affluent parts of the Bay Area? I'm not saying this is a large part of the buyer population, but you might be surprised how many people can actually afford Palo Alto, Lamorinda, and Marin. There are many dual income couples out there who are working high-paying jobs and have been good with their money. They CAN afford homes in these areas.

As for this article on median home price.... I really do not understand why people pay any attention to median home prices. They really don't tell you much & can be very misleading. I am not here to say that the Bay Area real estate market is hot.... it's not. But this median home price statistic is giving buyers a very false sense of how "affordable" many areas are and it's giving people the idea that the Bay Area is crashing and burning. It isn't in many affluent areas.

If sellers in affluent neighborhoods are holding out for high bids I am not surprised. There ARE buyers out there who can make the payments.

Because people like me and my wife make over 200k per year and still have a hard time finding affordable housing that's why. The average person in the Bay Area does not make what we make. So who is buying all these homes now?? Millionaires? People who have 300k saved? People like me who bought places before all this happened making what we make are foreclosing. Do you know how hard it is to save 40- 100k for a down payment?

[artemis78]

Originally Posted by clongirl

I'm of the mindset that house prices MUST adjust to the median salary of the area.

This is absolutely true, and I think that's what we're seeing now as a correction post-boom. But remember what "median salary" means in the Bay Area---in Oakland in 2008, for instance, median income adjusted for a family of four is $86,100. Under new lending standards, that family can afford a monthly payment of $2,225, or 31 percent of pre-tax monthly income, if they have no significant other debt. (Under the old standards, banks often allowed up to 40 percent, or $2,870.) If you have a downpayment of 20 percent at the current interest rate of 5 percent, you're looking at prices in the mid 500s. And that's the median, which means half of all households make more than that. While prices were higher than that in the boom, they're in that vicinity right now, so we're not that far off from a balanced income-price ratio (at least in this particular city).

What will change that, of course, is that median incomes are beginning to come down as jobs are lost, and people are carrying more debt, so they can afford less and less. I do think we'll see prices adjusting to that, too, until the recession ends. But checking prices against both median incomes and average rents in an area are both good ways to see how much of a bubble a given market is in and how much farther it may have to fall.