Distressed Properties in the Berkeley Area

by arlene on April 16, 2011

We’ve all heard about the “shadow inventory” of distressed homes, that large number of properties that may dump into our market at any minute from the banks’ stash of foreclosed properties, commonly called REOs. It’s impossible to know how much of an issue that will be in this area. Below I show the distressed property activity in the areas I cover since the beginning of the year. The Berkeley numbers remind us that we are not unscathed. Seven of the 21 foreclosures were in North Berkeley and the hills.

                                   Distressed Property Activity: January 1 – April 15 2011

  Short Sales Foreclosures Total Distessed Total Sales % Distressed
Berkeley   16   21   37 130 28.5%
Oakland 129 326 455 804 56.6%
Albany    1    3    4   27 14.8%
Kensington    0    2    2  14 14.3%
El Cerrito    1    7    8  45 17.8%
Piedmont    1    2    3  26 11.5%


Nationwide, Fannie Mae, in its most recent annual report to investors, said it acquired 262,078 homes in 2010, up 80 percent from 2009. REO sales picked up 51 percent, to 185,744, leaving Fannie Mae with REO inventory of 162,489 homes valued at $14.9 billion at the end of the year. The company also said $212.8 billion in mortgages guaranteed by the company were delinquent by 60 days or more.

 “Given the large number of seriously delinquent loans in our single-family guaranty book of business and the large current and anticipated supply of single-family homes in the market, we expect it will take years before our REO inventory approaches pre-2008 levels,” Fannie Mae warned.

In order to help sell off some of that inventory, Fannie Mae has recently re-instated a bonus program to buyers within California. Buyers who enter into contract on a Fannie Mae owned property from now through May 15th, and close by June 30th, will be eligible for $1000 in credits towards closing costs. The program is called HomePath, and closely resembles a program available last year, but this year’s program is less generous. The deal only applies to buyers who will owner-occupy their purchase.

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