“Underlying all the market changes is the prevalence of bank-owned foreclosures being unloaded at a discount. Two years ago, only 2.6 percent of all existing [Bay Area] homes that changed hands had been foreclosed on in the prior months. This year, more than half of the existing homes that sold in January and February were foreclosures.”
∙ Bargain home prices attract investors, novices [SFGate]
Very interesting to see these different figures together on a graph. Volume is definitely in foreclosure areas. The FHA rate is a little troubling though. Imagine what the fall would be without Gov’t subsidized housing (hint: even more affordable housing). The good thing about FHA volume is that the subprime crowd comes back into home-ownership at prices they CAN afford, not the “subprime” fiasco of late. These families have a shot at their own home at prices that make sense.
The WSJ reports today: “A spokesman for the FHA said 7.5% of FHA loans were “seriously delinquent” at the end of February, up from 6.2% a year earlier.”
and
“Since the collapse of the subprime mortgage market in 2007, most home loans for people who can’t afford a sizable down payment are flowing to the FHA.”
I was up at a friend’s ranch outside Sonora a couple weeks ago. His family owns a construction company and a lot of real estate in the area between Sonora and Oakdale (a town in CA most people on this list have never heard of). He said that they have been buying some homes in Oakdale this year for just under $100K all cash since they can keep their constructiuon workers busy and get a return of much more than CDs once they rent the places. He said that there is a lot of FHA fraud as people in the area that have no business buying a home (like his low paid laborers) have been able to buy homes without making any down payment since Realtors have been “giving” buyers downpayments (if you give away 3% of 10% fee you still make 7%). He said that if the economy gets much slower most of these people will be heading back to Mexico and leave the FHA (and us taxpayers) with a turd of a house in a crappy area…
did you read the end about RE investor Hagley. Flippin’s on again. Buy ‘n hold for cashflow is happening. Happy days are here again!
San frozi, Lmrim, you guys paint attention?
hipster: all in the EAST BAY where values have been decimated and it is cheaper to buy than rent. this could be bad news for sf as buyers jump the bay for affordability.
^ except that the neighborhods where all the forclosure/short sale activity are ‘slightly’ different than the hoods in real SF. Pretty different buyer demographics.