High-End East Bay Real Estate May Be Next Focus Of Foreclosures?!?!
October 13, 2009 by Jim Walberg · 4 Comments
Two years ago, who would have ever thought that the top 30% of our East Bay real estate market could be facing the next wave of foreclosures? You all know I am one of the most positive person during the worst of any economic condition. I do not participate in the “slipper slide of fear”. However…I also want to make sure that I am giving realistic information to my readers regarding the East Bay real estate markets. There may be trouble in “River City” regarding the higher end real estate in our region.
Zillow may not be my favorite resource for home values, but their chief economist is pretty darn good. Stan Humphries, from Zillow stated that only 16% of foreclosures in 2006 were in the top 30% of the market. As of July 2009 30% of foreclosures are hitting the top third of the market in the Bay Area. This is TWICE the number of foreclosures in this market slice as was happening three years ago! These are now showing up in the high-end real estate markets in 2009 as price discounting continues to drive this market slice further underwater.
Also, something for you to watch closely is what is happening with high end property rentals. We are noticing that many of our high end customers who know they will not be able to break even on the sale of their homes are now renting them. There rationale is that they will rent them at a loss until the market turns around in a year or two and then bring them back on the market. The challenge with this thinking is that the market may not come back that quickly. The possible result is the in a year or two there will be a glut of these higher end homes that come on the market which will actually drive prices downward.
Again, those of you who know me understand that I am not a “doom and gloom” person. However, in reading The Amherst Mortgage Insight report there are some very concerning statistics for all of us to pay attention to. There are currently 7 million homes in a shadow market — homes that are either in delinquency or in foreclosure, but not yet on the market. 
What this means is that there 135% of one year of existing home sales, which means the numbers we are seeing regarding homes sales that are not reflecting the turmoil that may be coming in 2010!
Solving the foreclosure issues is the key to us discovering a housing market that final stablizes. The banks are not moving fast enough to modify loans and allow people to stay in their homes. The Feds still have miles to go before we’ll get close to solving this crisis. I welcome your thoughts on this difficult topic. CLICK HERE if you would like more information about the value of your home. We are here to serve your real estate needs. Until next time…your East Bay lifestyle detective is on duty.
Related posts:
- September U.S. Home Sales UP 9.4%! An East Bay Real Estate False Indicator?
- East Bay Real Estate: Market Update – February 2009
- East Bay Real Estate: 2010 Update – Short Sales Replacing REO’s!
Filed Under: Blog, News, Real Estate, Sellers
Tagged: east bay real estate, High-end foreclosures, Jim Walberg, shadow market, Stan Humphries, Zillow
Scary but relevant information Jim. As always you remain on top of all things Real Estate.
Thanks for checking in Joe. This topic is not a fun one given what has happened with our shifting real estate markets the past two years in the East Bay. However, it is one that I feel must be addressed. There are some homeowners of high end real estate that are facing some tough decisions as to what to do with their homes; sell, rent, or even give up because there is no value left after refinancing. This is such a moving target right now with many hoping for an economic miracle to bail out real estate values. I don’t see one coming, but I have been wrong before. Stay tuned.
I guess that we don’t have more areas that are free from foreclosures…. It’s like a virus. Spread everywhere!
Yes, Matt…we are in the midst of an economic shift that has not been experienced in the past. Time will tell how it turns out. Thanks for checking in.