Why are real estate prices still so high? (San Francisco, Oakland: sales, foreclosures)

[Vario]

Hi all,

Just curious about this. Myself and another ex-BayArea were talking about this recently and we were appalled to see prices still so high, when other parts of California like Riverside are in ruins financially.

Thanks.

[18Montclair]

Well to be certain, prices in Solano County, Eastern Contra Costa County, East Oakland and Richmond did plunge up to 50% or more due to the real estate meltdown-mainly due to a glut of foreclosure properties on the market. ThaT didnt help sales much at first because loans were so hard to come by a few years ago.

Homes in those areas valued at between $500,000-$700,000 in 2007 fell to $100,000-$300,000 or less in 2008-2009 but since then prices, even in those areas, have begun to rise.

But as a result of banks loosening up to new loans, people once shut out were able to buy again and now prices have been increasing slowly at first but Ive noticed that over the past 6 months, prices in those areas have gone up tremendously.

A house in El Sobrante that was foreclosed on in 2008 was sold at auction for $200,000 and recently sold for $500,000 so we see that prices are climbing back to pre-crash levels, but now is still a really good time as far as price.

With respect to expensive areas like Central Contra Costa, the Tri Valley, San Francisco, Marin, the East Bay Hills, the Peninsula and Santa Clara Valley--prices dipped a little but those areas were far less affected by foreclosures and those areas had relatively small inventories to begin with so prices remained at or near their high levels.

We've seen a huge increase in foreclosure notices in January 2011 compared to January 2010. At this time, I cant say if its due to people falling behind due to increased Christmas shopping or if its symptomatic of a more serious problem such as slow job growth.

We'll see.

[CAVA1990]

Originally Posted by Vario

Myself and another ex-BayArea were talking about this recently and we were appalled to see prices still so high, when other parts of California like Riverside are in ruins financially.

Cause nobody wants to move to Riverside?

[DMenscha]

3 words. Supply and demand.

[mayorhaggar]

The Bay Area is just a very wealthy area and people didn't need to depend as much on poisonous sub-prime loans. Places like Stockton and Riverside have always been pretty poor and most people were middle class at best and had to use sub-prime loans that eventually they couldn't afford. Same in other places like Florida where there were never the incomes and wealth to support the massive price increases you saw in the mid-00's.

[sliverbox]

The bottom line is that almost anywhere remotely desirable or somewhat halfway decent in the Bay Area is extremely overpriced. As in we're talking around $500,000 for a starter home.

This along with numerous other reasons explains why California is losing more people that any other state in the country. Count us as one of those families in the next few years. In the meantime rent is still a relative bargain.

[CAVA1990]

Originally Posted by sliverbox

This along with numerous other reasons explains why California is losing more people that any other state in the country. Count us as one of those families in the next few years. In the meantime rent is still a relative bargain.

Not to worry. If you're leaving one of the coastal areas there will be someone to replace you. The only parts of CA that are losing population are inland.

[Joe_Ryder]

Originally Posted by DMenscha

3 words. Supply and demand.

Yep. I moved to CA almost 30 years ago and even back in the early 1980s, real estate costs were obscene.

[mrzod]

also, the "land" area in SF is limited vs. Riverside. The supply is already constrained while teh demand will never go away.

[bmw335xi]

Originally Posted by Vario

Hi all,

Just curious about this. Myself and another ex-BayArea were talking about this recently and we were appalled to see prices still so high, when other parts of California like Riverside are in ruins financially.

Thanks.

There's no space to build in San Francisco and salaries are still high in the Bay Area. I'm in the process of buying a condo for $250k that sold for $450k in 2008. Prices have come down, they were just incredibly high before.