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Affordability of Non-Foreclosed and Distressed Real Estate Low in SF

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By : John Cutts    99 or more times read
In the 2010 fourth quarter, the affordability of residential properties, including distressed real estate and new houses, jumped to its highest point in the U.S. in 20 years. A report from the National Association of Home Builders showed that more than 70% of residential properties that were sold last quarter were affordable.

However, newly built and foreclosure homes for sale in San Francisco remained more expensive than most U.S. markets. The region of San Francisco-San Mateo-Redwood City in California was ranked second overall in terms of metropolitan regions with the least affordable houses in the U.S. during October-December 2010. Only the area of New York-White Plains-Wayne had a lower affordability rating than the San Francisco region.

Although residential properties, including California foreclosures, remained relatively pricey in most areas of California, the overall affordability index of housing in the U.S. soared to a record high in the fourth quarter. Data from the association showed that around 73.9% of houses that were sold in the period were affordable for buyers earning an income of around $64,400, which was the national median household income in the U.S. for that quarter.

The affordability percentage for non-foreclosed and distressed real estate recorded in the previous quarter marked the eighth quarter in a row that the rating has gone beyond 70%. The previous record was 72.5% posted in the first 2009 quarter. According to housing industry experts, part of the reason for the high affordability rating of the nation was the tight credit and lending condition, which makes it harder for sellers to get their houses purchased, thereby forcing them to lower asking prices.

In addition, homes in foreclosure listings are being offered at heavily discounted rates, pulling the prices even lower in majority of U.S. areas. Analysts also stated that the index's result is great news for homebuyers, but poses a challenging market condition for house sellers and home builders.

With distressed real estate and foreclosures expected to reach their highest total this year, analysts stated that there is a possibility that the index will tick up again in 2011. However, they also stated that an improving economy and an expanding labor market might help push the prices of homes up this year.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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