I was doing some research for a client and thought that I would share some of my findings here. I am only looking at a small segment of the market--one zip code in Oakland: 94621--and at two-bedroom, one-bath single-family homes. In all of 2007, 49 2-BR, 1-bath homes sold in this zip code ranging from a low of $180,000 to a high of $485,000 (quite a range).
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What is happening today? So far only five homes have sold but 113 are on the market.
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The median price is barely 61% of what it was last year. Why so dramatic a change in a short amount of time?
If 5 houses sold (closed) the first quarter of 2008 and that rate continues, we could anticipate 20 sales this year or 41% of the number of sales last year. And even if NO MORE HOMES hit the market, there is a 5 1/2 year supply of inventory!
Some of the drops in price--from prior sales--are even more amazing.
What I am wondering is what has happened to all of these former homeowners? 38 of these are short sales and 8 are REOs (foreclosures). So over 40% of the current listings indicate that someone has lost or will be losing their home. Where are these people going to? And where are the new first-time buyers for whom these houses would be extremely affordable?
If despite interest rates and prices being LOW, people are unable to buy homes, then maybe we need to look at what it takes to qualify to buy a home. Some lenders are now requiring 700 FICOs. Is someone with a 620 FICO a bad person or a poor risk? Didn't used to be, but sure seems that way now.
Or maybe we need to look at more creative financing. Perhaps getting the seller involved in a seller carry-back? Or other incentives like paying the property taxes for a year?
I don't have all the answers. I am curious as to what others think. I think that it is sad that people are losing their homes and that many people who would really like to buy a home are unable to do so. Maybe when Hillary and/or Barack get to the White House, things will change. The idiot there now sure isn't helping matters despite his petty posturing and pablum.
(Listing and sales information taken from East Bay Regional Data, Inc.)
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