20
Percent of Silicon Valley Homes Are Nearing Foreclosure As Home Values
Drop at Record Pace
By Cassiano
Travareli
For the last 12 years, it is only in the last quarter of
2008 that metropolitan home values in San Jose, California have dropped
sharply, thanks to the economic recession and a deteriorating stock
market. Almost one in every five homeowners in the area is submerged
"underwater" with mortgage dues that are more than the value of their
homes, and will most likely give in to foreclosing their homes.
According to Zillow.com, a housing valuation company, San Jose home
values dropped 17.2 percent in the last three months of the previous year
to an approximated mean value of $587,360. This was the most severe
decline since the year 1996, and the most depleted median value ever since
the first four months of 2004.
All homes in the San Jose metropolitan area including the Santa Clara
County have lost a net value of $58.8 billion in 2008. Majority of that
loss which comprised $29 billion happened in the last three months when
the brutality of the economic recession was becoming more evident with
almost every passing week.
Moreover, the housing valuation company states that 44 percent of all
homes bought last year in the county were sold at a deficit to the
homeowner. That amount consists of both short sale transactions and
foreclosures. The former happens when owners sell their homes for a
smaller price compared to their debt to their mortgage lenders.
On the brighter side of things, there is a glimmer of hope for both the
local and state economies as some people have recently been purchasing
foreclosure properties with low prices. A report last week by the
California Association of Realtors indicated that home sales increased by
85 percent in California last December 2008, compared with December of
2007. The trade group also added that sales were also up by 12 percent in
the Santa Clara County. People can now afford to buy foreclosure
properties thanks to the low purchase costs and low interest rates.
Still, several Santa Clara County areas had alarming home value
declines, but only slight in other areas. For example, the median value of
homes in Gilroy fell to 38 percent from the last quarter in 2007. But in
the 94924 ZIP code of Los Altos, home values just fell by 5.4 percent.
Moreover, the 94301 ZIP code of Palo Alto was the only area in the county
to have a higher median value of 5.2 percent.
The prevalent drop in values has left a 19.4 percent negative equity to
all homeowners in the last three months. According to Zillow.com, this
means that the remainder of their mortgage loans has surpassed their
home's market value.
But results still vary from area to area. For example, only an
estimated 3 percent of homeowners hold a negative equity in Cupertino. In
Campbell however, the number was 16 percent. But when it came to the East
Side 95111 ZIP code of San Jose which was badly hit by foreclosures,
homeowners who were "underwater" because of their loans comprised 38
percent.
The last three months were especially difficult on home values in most
cities all over the nation particularly the ex-boom towns in Arizona,
California and Nevada. Still, according to the Zillow.com's Vice-President
of Data and Analytics Stan Humphries, Portland, Oregon and Seattle managed
worse for the first time compared to the national trend last quarter.
Cassiano Travareli has been educating buyers on the finer points of
San
Jose foreclosure homes purchase at Foreclosure-Support.com for over
five years. Click here to find
foreclosure
homes for sale.
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