An article today in the Yahoo! Finance section stated that SF Bay area home prices plunge 27 percent in June. Well, that’s pretty bad! However, as you read the brief article you’ll notice that they are talking about aggregate numbers from nine Bay area counties and for the combination of single family homes and condo/townhouses. So, as a person looking to buy or sell a property in one of Contra Costa County’s cities, what does this mean to you? Should you automatically assume that this 27% plunge is the exact impact your market has felt?

I hope you immediately answered the above question with a “no.” The numbers below for six different Contra Costa cities will help show the variance in both year-over-year and month-over-month trends from one city to the next. Real Estate is ALWAYS local. This applies to foreclosures as well as prices … you always need to take national and regional news with a grain of salt because it may or may not be reflective of your local market.

If you have questions about any of these numbers, or would like to see them for a different Contra Costa city, please let me know.

Governor Schwarzenegger signed into law the first major bill designed to curb more foreclosures in California this past Tuesday. The bill is comprised of three main aspects:

1. Lenders are required to provide homeowners with more, and earlier, warnings that they are headed towards defaulting on their home loans.
2. Renters will now be given more time to find new living arrangements when they are evicted by a landlord who is losing the property to foreclosure.
3. Local governments will be authorized to force lenders to maintain vacant property after a foreclosure.

You can read more about the new law in the Los Angeles Times article titled California Senate passes mortgage default warning bill.

Aspects #1 and #3 of this bill have the potential to make immediate impacts on anyone looking to buy a home. By requiring lenders to provide homeowners with more warnings about potentially defaulting, the government is hoping that fewer homeowners will actually default. If this plays out accordingly, it means there will be fewer foreclosures and bank owned (REO) properties coming onto the market each month. This, in turn, means the available inventory of homes for sale will be reduced and the corresponding demand for each house will likely rise … read this as: house prices will go up! Aspect #3 is also likely to increase house prices. By forcing lenders to maintain vacant properties, there will be fewer neighborhoods negatively impacted by REO eye-sores - the property with boarded up windows and a yard full of overgrown weeds. Because of this, distressed neighborhoods won’t have their overall value degraded to the same extent as before … as we all know, nicer looking neighborhoods demand higher prices.

The current inventory of available houses in Contra Costa County is extremely high, and the longer a property lingers on the market the less attractive it becomes. Questions start to be asked as to why no one has already bought it: Is it overpriced? Does it have unseen issues with the roof or foundation? What is causing everyone to pass on this home? Well, as the Washington Post article Freshening an Old Listing, and Other Tips for Worried Sellers explains, some sellers are trying to sidestep this problem by having their property re-listed in the MLS so its Days On Market (DOM) value will reset. The thing to keep in mind, however, is that a good buyer’s agent will do the necessary research to see past this re-listing technique and will evaluate the property for what it is worth based on today’s demand.

Starting on June 1st, Fannie Mae will institute a new, national policy on down payment requirements for conventional, conforming mortgages. As the announcement stated:

Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter (DU) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

What does this mean for you? Well, it will be possible to get better terms on a loan for a new home in Contra Costa County with a smaller down payment. If you’d like, you can read the rest of the announcement on Fannie Mae’s website: Fannie Mae Announces Single National Down Payment Policy; Replaces Policy Regarding Markets Where Home Prices are Declining.

Now, I’m by no means a mortgage expert, but if you are interested in learning more about what your mortgage options are, please give me a call (925.817.8428) or send me an email (Brian@SPARRproperties.com) and I’ll put you in touch with a couple people who are.

Probably not too surprisingly, the April foreclosure numbers in Contra Costa are higher than they were during the record setting month of March. Now, although it is a very unfortunate situation, it has created a wonderful opportunity for investors and other buyers to purchase homes at significantly reduced prices. In fact, I’m working with a number of individuals doing just that right now. So, to help give you an idea of the mindset of many investors, take a look at the recent San Francisco Chronicle article titled Timing may be right for real estate investors. If this is something you or a friend of yours may be interested in, give me a call (925.817.8428) or send me an email (Brian@SPARRproperties.com) and we can discuss it further.