Home prices in the Bay Area plunge

August 19, 2008 5:49:44 PM PDT
The California housing market got some good news and some bad news on Tuesday. Bay Area home sales are up a little bit, but prices have plunged.

Median home prices in the Bay Area dropped nearly 30 per cent in July to a 53-month low, to $470,000. The nine-county area did see a slight increase in annual sales of 2.2 per cent last month, because of the bargain basement prices.

While some Bay Area counties experienced a home sale rise, home sales in Santa Clara County dropped, except for foreclosed homes. The homes are selling for prices so low, they're selling for prices home buyers haven't seen in years.

"Were thinking of running a gas line to put in a gas stove," said Danielle DeRose, a new homeowner.

Owning a home is San Jose was just a dream for De Rose. After being on the market for a year, a three bedroom, two-bath home recently turned into a foreclosure. Danielle saw an opportunity and she jumped on it.

"You have to be on top of your game. You have to go out at odd hours to look at houses. You need to write up a contract immediately. There is not time to think, "Is this the one?" It's more like, 'OK, we need a house,'" said DeRose.

She wouldn't say, but she admitted she paid a lot less than the $700,000 it last sold for.

"From what it originally sold for probably about two," said DeRose.
"$200,000 less?" asked ABC7's Tomas Roman.
"$200,000 from the last time it sold," said DeRose.

Foreclosures like this now account for a full third of all homes resold in the Bay Area. Only four-percent were from foreclosures last July, according to Dataquick, a housing research firm.

While that allowed some counties to post sales gains, it's a different story here in Santa Clara County. Since July of last year sales of all homes dropped 13 percent. The median home price fell 16 percent from $700,000 to $585,000 in that same period.

"I think once they hit this $550,000 to $500,000 mark, around that you'll probably see then they seem to be stabilizing in that area," said Steve Friend, a realtor.

Friend has been a real estate broker for 15 years.

"Multiple offers on foreclosures in this price range, is pretty common," said Friend.

The prices of many foreclosed homes have dropped into the range that makes them eligible for new conforming FHA loans.

That's created a need for seminars like this one in San Jose, training mortgage brokers on how to apply.

"With the recent decline of available loans with the loss of subprime markets and a lot banks going out of business we have to look at a lot of other ways to get people financed," said Cheryl Mehe'ula, from the Foley and Company Mortgage Financing.

After asking mortgage brokers whether housing prices have dropped as far down as they're going to go, and they said they just don't know.

Elsewhere around the Bay Area, home values made their most dramatic dip in Contra Costa County. Dataquick says prices plunged 42-percent since last July. Alameda County home values went down 27-percent. Things were more stable in San Francisco, where prices dropped six-percent in the past 12 months.

Wednesday's Foreclosure Fair for those in danger of foreclosure: click here


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