REOs in the San Francisco/Bay Area
Real estate values throughout the United States are affected by foreclosures and the San Francisco real estate market is no exception. The same goes for the Bay Area real estate market.
Real estate investors and home buyers want to sniff out deals in this market, looking towards short sales and REOs (bank-owned property) to accomplish their goals.
DQ News, an on-line real estate news company, reported a sharp decline in homes sale as well as a decline in the median home price throughout the San Francisco/Bay Area for October 2010.
According to DQ News, ‘foreclosure activity remains high by historical standards but below peak levels reached over the last two years.’ Read the full DQ News article here.
Real estate agents, short sale specialists, and REO agents tell home buyers and real estate investors that this market offers extreme markdowns and amazing deals.
But is this true?
The answer depends on the exact location of the property, the condition of the property, whether there is competition for it (e.g. home buyers or real estate investors), which bank you are dealing with, and whether a real estate agent is listing the property.
These, of course, are only a few of the variables. Just to address one variable here: banks heavily rely on real estate agents to move foreclosed property off their books and in general want to see current market value for them when listing with an agent.
While there are some deals to be had when buying short sales and REOs, knowing this reality will help you and stir you toward properties that make financial sense. Always do your homework and know what you are buying.
An excellent real estate agent - preferably one who is also a real estate investor - is worth her or his salt in guiding you well here, whether you are a home buyer or a real estate investor.
So, are there great deals in the San Francisco/Bay Area?
Marin County as well as the City and County of San Francisco show the fewest REO listings. However, based on recent trends and forecasting statistics more such listings and with that real estate investment opportunities are coming.
In the beginning of 2008, of the 4600+ homes for sale in San Francisco, only 3% were REO listings. By November 2008, that number increased to 10%, then three months later to 15.
San Francisco REO listings predominantly exist in the southern and southeastern San Francisco neighborhoods - such as Oceanview, Ingleside Heights, Bayview/Hunter’s Point, Visitacion Valley, Portola, parts of the Mission and Bernal Heights, SOMA, and Mission Bay.
However, short sales and REOs also sporadically appear in more upscale neighborhoods such as St. Francis Wood, Noe Valley, the Marina, Pacific Heights, Russian Hill, Nob Hill, and the Richmond District.
On November 11, 2010 the San Francisco Business Times reported that ‘the number of Bay Area homes taken back by lenders fell sharply in October, but the respite is likely to be short lived.’ The same report states that 1,383 foreclosed homes were seized by banks in October 2010—20.3% lower than in September 2010.
RealtyTrac, on the other hand, projects that the number of bank-owned properties are actually on their way back up. It might be of interest that about 70% of the REOs are single family homes, 20 to 24% condos, 8 to 10% 2-4 unit buildings, and 1% TICs. Further, the average sales price of bank owned properties, according to RealtyTrac, ranges from $154,740-$562,774 as of November 2010.
Approximately 1 in every 836 homes were foreclosed on in San Francisco during October 2010. Although this number is lower than it has been, forecasters say that this number is likely going to increase as early as next month. And the good news is that there are great deals to be had for home buyers as well as real estate investors. In order to do so, make sure you have the right real estate agent representing you.
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