Real Estate Investors May Soon Have to Compete with County and City Governments for Bank Owned Properties

Savvy real estate investors entered the market several months ago to begin gobbling up prime REOs (bank owned properties). Many investors are taking a 5 to 7 year hold strategy on the foreclosures they are buying.

And why not? The East Bay rental market is still on solid ground. Families being displaced by foreclosures have to go somewhere and many of them are “hopscotching” into homes that were foreclosed on months ago and are now being leased.

Many foreclosure homeowners had no problem with their original mortgage payments of $1500 to $2200 a month. But when their ARM reset and their payments increased $500 to $1000 a month, many just could not find the money to make those higher payments. Leasing a rehabilitated bank owned property at the same rate as their previous mortgage payment is a no-brainer for many of these homeowners.

Some investor groups are putting significant down payments on REOs they are buying to bring the leased properties into a positive cash flow position so they can ride the market to better days.

Antioch & Brentwood, California represent two of the most active markets for investors. Betting that the real estate market will recover enough in 5 to 7 years, they are hoping to more than triple their investments. Antioch & Brentwood are positioned for additional growth potential in the near future because of three transportation projects that will significantly impact commute time:

• BART extension into Pittsburg
• Highway 4 bottleneck removal
• James Donlon Road connecting to Kirker Pass Road

The completion of any one of these would positively affect real estate values in Antioch & Brentwood. Completing 2 or 3 would make the area even more attractive to buyers looking for affordable housing in the East Bay.

Real estate is cyclical, the East Bay real estate market will rebound. When property values begin to rebound in the 680 corridor, buyers will once again look to east Contra Costa County for a home to own.

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 Contact Paul for more info (925) 963-4246 - he's been out to Antioch, Brentwood and Tracy making offers like crazy lately.

Actually, according to Leslie Appleton-Young, Vice President and Chief Economist for the California Association of Realtors, California real estate bottomed out in October of 2007 for number of units sold.

Housing prices are still settling, but the number of homes sold has been climbing steadily since November of 2007. Contra Costa County has not suffered as much as most of the state and we are ahead of the national average on positive trending.

Does this mean sunny skies and clear sailing?

No, we are still very much in a market that is facing tough challenges. Sellers will continue to grapple with pricing it right. Buyers will still struggle with the constant changes and challenges of financing.

BUT – Contra Costa County is currently experiencing a fairly normal market for sales activity. Months of inventory is in the 5 month range.

A lot of the good news with the number of sales and the months of inventory is being fueled by the high levels of foreclosures and REO’s being purchased by investors and home buyers looking for a good deal.

What to look for in today’s real estate market if you are considering the purchase of an investment property.

• Transitional recovering/growing economy
• Positive net population migration
• New net job growth
• A short-fall of new construction and permits
• Affordable housing to wage ratios

Why do Antioch and Brentwood represent such attractive investment opportunities? It’s more than price. Contact Paul (925) 963–4246 if you would like to know why these two communities are looking so attractive to real estate investors.

Home Sales Figures for Alameda and Contra Costa August 2008

Brentwood, Antioch & Pittsburg continue to see buyers and investors gobbling foreclosures. Concord, California is seeing a lot of downward pressure on condos as the price of single family homes has dropped to the level of what condos used to cost.

Danville, Lafayette and Walnut Creek are showing the slowest declines in median home prices for the month of August.

I can’t tell you how many times over the last couple of years I have talked to home owners in the East Bay that feel trapped in their home of 20 to 30 years.

These homeowners are getting ready to retire and the mortgage is low or paid in full. But, these California boomers felt trapped by high California real estate prices and their low property tax base. What I kept hearing was – We can’t afford to move.

Well – NO MORE – the situation has totally reversed! Working-class boomers can't afford to not move in this market. Now is the time to sell that home of 20 years in San Ramon, Dublin or Walnut Creek and look to Brentwood or some other hard hit community in Contra Costa County.

Property values in some California communities have fallen 50% and one Contra Costa neighborhood has seen property values drop back to 1998 levels.

Imagine selling your 1500 square foot home in San Ramon for $700K and buying a 2200 square foot home in Brentwood for $300K. Transfer your property tax base and that is a lot of left over cash for retirement living.

East Bay boomers looking to retire in the next five years MUST explore this option. This is not going to last. You are looking at a perfect scenario to stay in the East Bay area, buy a retirement dream home, keep your low tax base and walk away with a boatload of cash for retirement.

Even if you are going to wait several years to retire, prices are so low in the east county, you can lease your retirement home out for a few years until you are ready for it. Rents are still rising in the East Bay.

Knowledge is Power. Contact our team’s relocation expert – Ginny Mees at 925–699–3328 to explore how you can leverage today’s housing market to your advantage.

A couple of weeks ago I attended a meeting of the Contra Costa Chapter of the Women’s Council of Realtors in Danville, CA. Bill Brown, President of the California Association of Realtors (CAR) was the guest speaker at an early breakfast held at the Crow Canyon Country Club.

Angela Muetterties, President of Women’s Council of Realtors CCC, officiated the proceedings

When I tried to edit the video footage I had shot, I discovered a software problem that has taken me two weeks to sort out. I guess this post falls under the heading of – Better Late Than Never.

Bill spoke about the challenges in the real estate industry and the continuing impact of the subprime market collapse. Housing affordability was another hot topic.

According to news today, the challenges continue:

California and Florida continued to represent a disproportionate share of the country's new foreclosures. The two states accounted for 30 percent of mortgages starting the foreclosure process, the association said. "In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through," Doug Duncan, chief economist for the Mortgage Bankers Association said.