Buyer's California real estate market takes hold in home listings
By Barbara E. Hernandez found atmercurynews.com
Contra Costa Times 09/16/2007
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Rising California home prices are no longer a sure thing. A buyer's market has taken hold.
Many home sellers, bogged down in a housing downturn, are now doing the only thing they can to sell -- dropping prices. Only this time, the sagging market often means taking a loss if the home was bought in 2005 or 2006.
Christopher Thornberg, principal of Beacon Economics, and the former UCLA Anderson Forecast economist who predicted the "housing bubble" since 2002, said that sellers' only hope is to "price to sell."
"You want to get out of the market," he said. "There's no point in holding out if you want to get out before the next three years."
With the credit market slowed and housing on the decline, effects on buyers have been evident, said Max Neiman, associate director of the Public Policy Institute of California, a think tank based in San Francisco. |
The credit collapse unnerved people so "they're not willing to buy, not willing to bundle and not willing to provide credit," he said.
"Any number of people don't want to get caught up in the process and worry about prices falling even further," he said. "They want to sell now."
Thornberg said the instability in the market have made a state of fence-sitters, making the market worse.
Research by the Contra Costa Times found that although east Contra Costa and Alameda counties as well as Solano County have lower-cost homes, homes in Alameda, Walnut Creek, Pleasant Hill and even blue-chip San Francisco are affected by the price drops.
"This will spread," Thornberg said. "It will eventually have an effect. ... It will circulate through the entire Bay Area and it will be a stubbornly slow process."
Few places have been hit as hard as San Joaquin County, where foreclosures are estimated to be some of the highest in the nation, according to
RealtyTrac. In the first half of 2007, the online company estimated about 1 in 27 households in the county -- the highest rate in the nation -- were affected by a foreclosure.
The California Association of Realtors reported that the Central Valley median home was $353,820 in July 2006 and dropped to $326,600 this year, a 7.7 percent decrease.
Although median prices in many areas have risen, data companies like DataQuick Information Systems, report that it's the higher-end homes raising the median. It's the starter home segments that aren't selling very well and drowning in inventory, due mainly to more restrictive credit standards, analyst Andrew LePage told the Times.
"The regular homes will not sell until all the foreclosures are gone," said Dave
Konesky, a Tracy-based real estate agent.
He said that now many buyers look at a house and offer what the foreclosed home down the street is selling for. "They offer the foreclosure price, take it or leave it," he said.
Konesky said that there were only two home sales pending recently in Tracy, one selling for $1.4 million and another for $1.2 million.
Adding to inventory are those sellers who are just testing the market.
"I just had one for 173 days and they kept saying to leave it on," he said. "Eventually I told them, 'This is a waste of my advertising dollar, you haven't had a showing in months.' People have to get realistic."
While cutting price can make a difference, many buyers are refusing to do that. Others are refusing to make changes in the home itself. Konesky advised cutting those clients loose.
One of his Tracy listings, on 1220 Brighton Drive, is a home selling for $419,000 was previously bought in 2004 for $430,000. "It will probably be priced at $399,000 soon."
The phenomenon isn't isolated. In Brentwood, agent and broker Bryce Ellsworth tells story after story of owners selling for less than they bought their home for in 2004 and 2005 -- many just eating the loss.
"We're at the 2004-2005 prices and some are even 2003-2004," he said.
A quick perusal of the multiple-listing services and Ellsworth says the same thing is happening in Walnut Creek, Pleasant Hill and other areas. The market is affected by three main factors: rising interest rates, the housing market downturn and mortgage resets, something affecting the entire Bay Area.
"I think our area is more impacted because our homeowners don't have the long-term experience or cash reserves to ride it out," Ellsworth said. "In the Silicon Valley and Peninsula where incomes are much higher than here ... they will be less impacted."
Dale Cose, 52, a developer based in Tracy, is now looking for a home and has a lot to choose from.
Cose, who wants a home in the $300,000 to $350,000 range, said he hopes to get a good deal with so many foreclosures on the market.
"I don't have the same feeling of what happened in 1988 and 1992, where everything started free falling," he said. "You only see investors dumping their properties."
Cose lost his home to foreclosure in 1995 and has been renting since. He said he's sure buying now will be a good investment later, but most people find the housing market difficult to predict.
"The thing is that you never know where the top or bottom of the market is," he said. "You never know until after the fact."
Barbara E. Hernandez covers real estate. Reach her at 925-952-5063 or
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