ola30%5ccommonfiles%5clistingpictures%5cMAXEBRDI%5c0%5cMAXEBRDI40475900.jpg” alt=”" /> By most accounts, the real estate market in San Leandro is improving. Prices have risen a http://i3.ytimg.com/vi/6k_JfnQweRg/default.jpgfull 1% and homes are selling 25% faster this year than last. In the time period between January 1 2009 and July 20 2009, 523 homes sold in San Leandro. It took an average of 48 days to sell each of those homes. The important number to look at is that a whopping 64% of those sales were distressed sales, either bank owned REO sales (48%) or short sales (16%). When contrasted with the same period for this year, we find that sales have gone down 19%. That news, in and of itself, is not a very good sign. When you dig a little deeper, you find that San Leandro bank owned sales dropped from 48% of the total last year to only 39% this year. The total number of distressed sales also fell in terms of percentage from 64% to 58%. While a drop in distressed sales is good for San Leandro real estate, the amount of distressed properties currently for sale is still very high at 58% of all active listings. For San Leandro to return to a prosperous real estate market, the number of distressed properties sold needs to return to a more historical norm in the range of 15 to 20%.
WHY ARE FEWER DISTRESSED SALES GOOD FOR THE MARKET?
Fewer distressed sales is good for the real estate market. It allows normal market forces to take effect. It allows home sellers to enter the market without the fear of giving away their homes. A normal market allows buyers to shop for property knowing they are making an excellent investment decision. As more regular sales dominate the market, appreciation will improve and home prices will rise. This rise in price will be much less than in the boom years of 2000 to 2005. I dont believe you will see double digit percentage increases in prices for a long time. However, returning to a normal market will allow a more normal appreciation rate of approximately 4 to 6% annually. When real estate does well, the economy as a whole is usually doing well. That would be a welcome change for all of us.
How do you see the market going? Do you think rising home prices are good or bad for the economy? Let me know.
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