Sunday, November 12, 2006

At the Bottom of the Pyramid

From the Sacramento Bee:

The typical first-time buyer, Sacramento real estate agents say, is between 25 to 35 years old, with a household income between $60,000 and $70,000 a year.
...
Members of this group -- often young and mobile -- also must consider the risks of being transferred or moving to new cities before they gain enough equity to avoid getting stung financially.

"Eight years in my lifetime? I have no idea where I'm going to be in eight years," says Alison Munro, 28, of Vacaville. Munro and her fiancé, both teachers, are prime first-time buyer candidates. They're saving for a down payment and looking at options from Sacramento to Chico, as well as markets in Oregon and Colorado. "We're thinking spring now and maybe next summer," she says.

Munro is among those who believe prices have further to fall. She says her peers have experienced all manner of frustration with housing prices that soared away from them in their 20s."I hear people say, 'I'm never going to be able to get a house in California,' " she says.

Others who bought late last year and lost equity, or who find themselves with a mortgage that allows too few other pleasures, are looking for help. Munro says she has friends in Benicia who took on roommates to help make payments."It's not that they couldn't make the mortgage payment," Munro says. "But they couldn't go on vacations in the summer."
...
Growing numbers of financially troubled properties also represent new discount possibilities for buyers, real estate agents say. Foreclosures and short sales, where banks accept lower prices to avoid repossessing the house, are up. So is the number of bank-owned properties. "I know there's at least 200 in our four-county area," says Carey Covey, a broker with Sacramento's Cook Realty.
...
Across the capital region, home builders are trying to reach first-time buyers by going small, pushing condominiums to 25 percent of the new-home market, pricing some units in the $250,000 range and beginning to build residences that friends can buy together.

5 comments:

Lander said...

Thanks to a reader for sending in the link.

Anonymous said...

The last paragraph is especially ominous. Homes are getting smaller -- lots of small condos. In the Bay Area there are tons of 1bd/1ba, and 2bd/1ba condos (< 900 sq ft). Also it's true that instead of buying homes by themselves, folks are pooling resources with friends to buy homes. If these continue to happen, it might keep the market from falling too hard.

AgentBubble said...

Growing numbers of financially troubled properties also represent new discount possibilities for buyers, real estate agents say. Foreclosures and short sales, where banks accept lower prices to avoid repossessing the house, are up. So is the number of bank-owned properties. "I know there's at least 200 in our four-county area," says Carey Covey, a broker with Sacramento's Cook Realty.

I just added a post on the Sac Real Estate Statistics blog with current numbers for distressed properties. In short, of the 15,330 "Residential" listings in MLS, 1,016 are classified as a short sale, bank-owned, foreclosure or foreclosure pending.

N_FO said...

Below is a site with some evidence to support the idea that things could be looking up.


http://drbrightside.blogspot.com/

Anonymous said...

They should be spending no more than $280,000 if their household income is $70,000.

So what does that mean?

The median will have to fall to $300,000 or so (2003 price levels).