• Median house price in Santa Clara County was $515K, down 34% vs. Oct 2007.  However, the number of single-family homes sold was 1022, up 24% vs. the prior year. 
• Although there is certainly some depreciation in the value of homes, a major factor behind the decline in median home prices is the number of REO property sales.  In both Alameda and Santa Clara County, there was a marked increase in sales of these bank-owned homes.  For example, over 33% of the home sales in Santa Clara County last month had been foreclosed on within the prior 12 months.  By contrast, in October 2007, REO properties comprised less than 4 percent of sales.
• In addition, sales of higher-end homes declined as a percentage of the total.  For example, only 11% of homes last month were sold for greater than $1M.  By contrast, in October 2007, almost 30% of homes sold at the $1M+ level.  
• As we head into the holiday season now, we can expect the market to hit its seasonal slowdown, as inventory (number of homes for sale) and demand quiets down until the new years. 

In my view, given the seasonal slowdown, there are very good deals to be had here in the Bay Area.  Furthermore, with an incoming Obama administration that is more likely to push for policies helping homeowners facing foreclosure, I believe that the number of homes entering foreclosure will gradually stabilize over the next year and then decline.  Regardless, its certainly a good time to start searching online for properties that interest you.  You can do this search and get automated email updates on homes that match your criteria on my website (www.FremontHomesTeam.com), by clicking here.  

• Lower the interest rate
• Stretch out the term of the loan to 40 years
• Lower the amount of the loan
• The underlying goal is that monthly payments should not exceed 38% of a family’s monthly income. 

While the plan is certainly helpful, it isn’t as broad as the plan championed by the FDIC chairwoman, Sheila Bair.  This is because the Bush administration plan focused on the Fannie and Freddie guaranteed loans, which are “conforming” loans (i.e., less risky vs. subprime loans).  Bair’s plan had called for a $50BN government plan to modify loans. 

I suppose one’s preference here depends on how far they believe the government should extend itself in terms of loan modifications.  Regardless of your views here, based on President-elect Obama’s previous voting record on real estate or loan-related issues, I expect that a much broader loan modification program will work its way to Congress once the new term gets rolling in 2009.

Veena Grover  |  RE/Max Accord, Fremont CA  |  http://www.FremontHomesTeam.com