Making the most of a bad situation - the number of people calling and emailing me lately that are interested in looking at investment properties has been extremely impressive. Inventory is high … prices are extremely low … mortgage rates are competitive. These people clearly see an opportunity to make the most of an unfortunate situation. And I’m not the only investor’s agent that is experiencing this - take Jeff Brown down in San Diego - he mentioned the following in his article Random Thoughts Real Estate Investors Have These Days:

Low prices. High income. Low interest rates. Geographically unlimited access.

Call it what you will. We call it a perfect storm - the kind in which you wanna get drenched. Capital growth storms don’t come around much, and that’s an understatement. I’ve been licensed since Nixon’s first year in office, and this is the first one I’ve ever witnessed. That’s 39 years.

If you’re tired of sitting back and watching your stock portfolio dwindle or you simply feel the time is right to diversify into real estate, give me a shout.

Jeff Brown, aka the BawldGuy, wrote a great little article the other day relating real estate to tornados - Tornados Are Local - So Are Down Real Estate Markets - Profit From It.

No matter where twisters show up, weak or strong, they’re local in nature. There are no exceptions, nor have there ever been. Real estate behaves similarly.
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Is the current economic crisis like a tornado? In terms of real estate and lending it sure is. Would I tell ya to invest in real estate located in hard hit regions like San Diego? Perish the thought. But this economic tornado hasn’t and won’t touch down over the entire country.

Bay Area real estate, and the East Bay in particular, is no different. Some areas have definitely been hit harder than others, but we have areas where investors are generating positive cash flow today on properties that are in prime locations to reap the benefits of appreciation down the road.

Now, this obviously isn’t going to be the right time for everyone to make a move into real estate. But, for some, this unfortunate national situation has created a great opportunity for them to profit from. Which group are you in?

Foreclosures offer a great opportunity for a bargain; we’ve been hearing this for a while now.  But, what hasn’t been told is just how big of a bargain that might be.  That’s why I went ahead and did some analysis on the sold foreclosure real estate data for Contra Costa County over the first seven months of 2008.  The results were separated into two groups: 1) comparing the final sold price to the original listing price and 2) comparing the final sold price to the final listing price after any price reductions.  As you will be able to see, the county averaged a 10% price reduction on the original list price and a 2% price reduction on the final list price:

What this doesn’t show, however, is the fact that many of these properties are starting with their original list price already below the current market rate.  In addition, we’re not seeing any of the negotiated lender incentives such as reduced closing costs or reduced interest rates.  Suffice it to say, though, there are huge opportunities for buyers to get a great deal today.

After reading articles from both the SF Chronicle and MSNBC this week, it’s no wonder that so many people I talk to about the real estate market are confused. With conflicting information coming from all angles, who and what should you believe? In this instance, the SF Chronicle article titled Foreclosures smack home prices - down 29.3% stated:

Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, said he thinks the foreclosure flood makes the market appear much worse than it really is.

Whereas, the MSNBC article, Foreclosures likely skewing housing indicator stated:

Some real estate analysts say this may indicate that housing conditions are worse than they now look, dampening hopes that the troubled market could soon be bottoming out.

The thing to keep in mind, though, is that our local market here in Contra Costa County doesn’t always follow the national trends. Right now, correctly priced properties in good neighborhoods are selling fast - often times with multiple offers at or above the listing price regardless of whether they are a foreclosure or not.

It’s hard to have a conversation about real estate today and not mention the foreclosure situation, especially here in California and the Contra Costa County. But, what I’m finding is that a lot of people don’t fully understand the entire foreclosure process and how it is impacting different cities within the East Bay. Notice of Defaults, short sales, auctions, REOs - these are all terms that we hear used in the media, but what do they really mean? Well, I came across a great article on CNN Money this past week that helps explain the different stages to the foreclosure process and how you can purchase properties during each stage. If you have a couple minutes, I’d recommend that you read through it - How to buy a foreclosed home.

In addition, take a look at the following chart - it highlights the impact of foreclosures on some of the major cities in Contra Costa County.  As you will quickly see, not everybody is effected to the same degree!