Bargain-priced homes spark sales surge

February 26, 2009 7:08:19 PM PST
The are some encouraging new numbers for the California housing industry. The state realtor's association says existing home sales are up 100 percent over a year ago, and for the first time in two years, are on pace to sell more than 600,000 homes in 2009.

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If the housing crisis has a silver lining, Kaleo Cornwell found it. In the midst of a recession, he is living the American dream.

"It feels really good," said Cornwell. "It's my first home, so that's a big deal to me."

Foreclosed properties have flooded California's housing market. First-time home buyers and investors are making their move. Sales of existing homes are up 100 percent from this time last year.

"I'm seeing a lot of activity and a lot of multiple offers because now the banks and the lenders are finally pricing their properties correctly," said Intero realtor Jim Matzen.

There has been a sharp drop in home prices. In January, the median price for a single family detached home in California was just over $254,000. That is down more than 40 percent from a year ago.

At bargain prices, homes are also selling faster, moving in just under 50 days compared to 70 days a year ago.

Another factor in the home sale surge is interest rates which are hovering around 5 percent.

"We're seeing FHA and conventional Fannie Mae rates in the fives, sometimes, occasionally they'll dip down into the fours, but their excellent buys," said Don Campagna, senior loan officer from Prospect Mortgage.

A once depressing housing market is alive again with tales of bidding wars.

For example, the realtor handling one bank-owned property in San Jose said it was listed two weeks ago for $324,000. Already a bidding frenzy has pushed the price up to $400,000.

Cornwell bought his San Jose home complete with pool for $465,000.

"A little bit more than I was expecting to pay, but it's so much cheaper than what this house would have been nine months ago, two years ago," said Cornwell. "It's pretty unreal."

What seems very real is that at these prices, home buyers are back.

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