I just read an interesting article on the state of home sales in parts of Oakland. Low priced ($200,000 and less) homes are becoming very attractive to investors. They can buy a home, rent it out, and still have positive cash flow because of the strong rental market. Many investors are coming in with all-cash offers for a smooth transaction with the bank.
The median price of a home in Oakland is now $330,000 which is roughly half of what it was only 18 months ago. What is driving homes sales up and prices down is the amount of REOs (bank-owned) and short-sales being sold. 50% of homes sales last month involved foreclosed homes, but foreclosures only represented 14% in Dec. 2007.
Banks are also starting to list their homes low and let the market determine the price, much like the hot times a few years ago. It is not uncommon for certain homes to have 5-20 offers, many over asking, as investors and families are starting to fine real deals. Sometimes the houses sell so quickly that those who wait a day or two are unable to make an offer. One of my clients found a house they loved only to find out that three days after it came on the market, it had already received 16 offers. Truly a challenging market, even with the bargains available.