Tuesday, September 01, 2009

More San Francisco Bay Area homes sell for less than $60,000

More Bay Area homes sell for less than $60,000: "Condos for $20,000? Single-family homes for under $60,000? What is this, Detroit?

It's the topsy-turvy world of Bay Area real estate. Despite studies showing prices slowly rising overall, homes at the low end appear to be playing a game of limbo, flaunting prices comparable to what you'd pay for a car."

I would have thought 20K would get you a hotel room for a month, but certainly not a condo. What a crazy market.


Anonymous said...

Why buy what can only be viewed as a liability?

Fred Pilot said...

"Many condos are particularly cheap because of financing issues, said Tim Garton of Coldwell Banker in Vallejo. Government-backed loans, which account for 90 percent of mortgages these days, are not available at complexes where too many residents are behind on their homeowner association dues, or too many units are not owner-occupied.

"These red marks tally up, and suddenly there is no financing available," he said. "That takes out a huge percentage of the potential buyers. Your pool of potential buyers becomes very small; just the cash buyers. The fewer potential buyers, the more you have to lower the price"

This illustrates how secondary lending policies re owner occupancy levels actually increase the conversion of condo homeowner associations to landlord associations, which is contrary to the policy's underlying intent. Those cash buyers more likely than not are looking to rent out the units.