Bay Area real estate makes a comeback

August 25, 2009 7:02:12 PM PDT
There are new signs of confidence in Bay Area real estate. Home prices here, and around the country, have now begun to rise from the depths of a three year slump.

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An index of housing prices in 20 U.S. metropolitan areas shows bay area homes selling for 3.8 percent more in June than in may -- the second best improvement in the country, although still 22 percent below last year.

Cherie Colon says the prices on bank owned properties are driving the market: statewide July sales of single family homes are up eight percent from a year ago.

A foreclosed home in San Jose was listed for just under $400,000.

"We're back to seeing a minimum of 10, 15, 20 offers. This particular house we're in went 80K over the asking price with 23 offers," said Colon.

The inventory of homes on the market is about half of what it was a year ago and buyers seem to have some confidence that real estate has hit bottom, even in the luxury home market. There was an 11 percent surge last month in the sale of homes over $500,000.

"The California Association of Realtors just produced their top 10 city list for average sales price and three of our communities made it: Palo Alto, Saratoga, and Cupertino, so obviously homes are selling in the higher end," said Quincy Virgilio from the California Association of Realtors.

The market however is far from recovered.

It's estimated 14 percent of California homeowners will be at least 60 days behind on their mortgages by the end of the year.

For the Bay Area, the prediction is nearly one out of every 10 homeowners will fall behind. Two years ago, the bay area rate was closer to one out of 100.

the foreclosure threat has migrated from sub-prime mortgages to double digit unemployment. the jobless are the second wave of anticipated mortgage defaults.

"I think it's going to continue to get worse. If people are unemployed, I don't care what kind of loan they've got, they can't pay their mortgages," said mortgage broker Cathy Warshawsky.

The recovery in the housing market has been helped by the federal government's $8,000 tax credit for new home buyers. That credit expires in December and many industry groups are not only calling for Congress to extend the program, but to expand it to include all home buyers.

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