Foreclosure Climate Forces House Prices to Tumble in San Francisco

Posted on June 2, 2009
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The foreclosure climate has forced houses prices to fall by nearly 41% in San Francisco Bay region from what it was a year previously. Of all the houses sold half came from the foreclosure category according to MDA DataQuick.

In one year the median price fell from $518,000 to $304,000. It calculates to a drop of 54% from the heights reached during the housing boom two years previously. In the area comprising of 9 counties 7,139 units (new and old including condos and houses) were sold. From April 2008 it was an increase in sales by 13%.

John Walsh of MDA said, “Job losses and historically high foreclosure levels continue to pose serious threats to housing stability. In much of the Bay Area, there’s the added problem of ‘jumbo’ loan financing still being relatively expensive and, for many, hard to get.”

The sales have started picking up for a variety of reasons. Mortgage rates are at a record low, the loans will be backed by Federal Housing Administration and there are plenty of houses to pick from. The long term mortgage rates dropped to 4.82% as announced recently by Fannie Mae and Freddie Mac. The Federal Reserve is buying up mortgage-backed-securities worth $1.25 trillion to facilitate the pushing down of mortgage rates.

Of all the deals contracted in the Bay Area, 47% came from the foreclosure category – it being the lowest since 2008 November. It is the first time buyers who are financing their purchases with FHA mortgages that have pushed the sale numbers to nearly record levels.

Loans worth more than $417,000 are referred to as jumbo loans. These financed 22% of the residential house sales – it is less than 60% in comparison to the pre-credit crunch time of August 2007. Expensive coastal area houses are not selling well as per the findings of MDA DataQuick. The latter is a data collecting firm based in Vancouver and a part of MacDonald Dettwiler and Associates

Increases in sales were noted in Solano, Contra Costa, Sonama, Alameda and Santa Clara. There were sales decline in Napa, Marin, San Mateo and San Francisco.

The prices dropped significantly in all the nine counties but it was the most in Solano. Here the median fell by 44% to $180,000. In the Bay Area the median price dropped by 4.8% from March this year. The last time that the median had increased from the month before it, was in October 2007. It had gone up by 1% from August 2007. The highest price noted was $665,000 during June to July 2007.

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