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Surge in Sales of Bay Area Foreclosed Homes



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By : John Cutts    99 or more times read
Sales of bank-owned foreclosed properties in California’s Bay Area increased in January. Of the 3,918 existing homes sold, 54.2 percent were bank-owned foreclosed homes. According to San Diego-based research company MDA DataQuick, the January existing-home sales are a big increase from the 2,312 total sales in January 2008.

The reduced prices of the bank-owned foreclosed homes pushed down the median price of existing homes to $304,000, the lowest level in nine years. The low prices also limited the sale of newly-built homes to only 340 units in January, nearly 50 percent of the 657 units sold in the same month in 2007 and the lowest sale in 21 years.

The median price is the middle price in a series of prices arranged from the lowest to the highest. The median price is lower if more lower-priced homes were sold.

Before the credit crisis started in August 2007, nearly 67 percent of Bay Area homeowners had mortgage loans over $417,000, according to DataQuick. Last January, less than 13 percent of mortgage loans were above $417,000.

The increase in sales of existing homes in areas hit hard by foreclosures is also an indication of the rising number of foreclosed homes being sold. From DataQuick’s data, the areas of Richmond, Pittsburgh, Oakley, Antioch, San Pablo and Fairfield had record sales of existing single-family detached houses. These areas are also known for affordable residential properties.

DataQuick’s president John Walsh said that sellers, developers, construction suppliers and real estate financiers are always asking when the housing market will recover. They are worried about how long they can survive the lack of profits in their businesses.

On the other hand, Walsh said, first-time homebuyers and some investors are having the best times of their lives as they see a lot of low-priced homes in the area. As shown in the rising number of affordable and California foreclosures being sold, first-time homebuyers are grabbing the chance to buy low-priced attractive houses they could not have afforded in a normal housing market.

An investor in Oakland who buys a single-family home in the $300,000 range will spend about $30,000 in repairs. After renting it out, he will have a positive cash flow of about $2,100 a month.

In Richmond where the prices are lower, an investor can buy homes for $90,000, spend $25,000 on repairs and then rent it out for $1,400 a month. Investors know that if Obama’s foreclosure program is implemented, the housing market would recover and the home prices will rise. They want to buy during these times of low median prices so that their margins would be higher when the housing market finally recovers.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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