Foreclosure in Hayward>Question Details

Erin, Home Seller in Hayward, CA

We bought a townhouse in Hayward, CA about two years ago. (Around $560,000) Now the prices have dropped

Asked by Erin, Hayward, CA Fri Feb 1, 2008

drasticly, and we are distressed that we will never be able to sell. Will the market ever go back up, and if so, when??

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Charles clearly has a better handle on the Hayward market than I do, but his estimate of the time frame for price recovery agrees with what I've been hearing, and what makes sense to me. However, I'm not sure I agree with his recommendation. And here's why:

Basically, he suggests getting out now, if you can. That really depends on your situation. If you know you're going to have to move, that's one thing. But, as I read your question, it appears that you're concerned--understandably so--about whether the market will "ever go back up." And you wonder if you "will never be able to sell."

Yes, eventually the market will go back up. It may not be for 3-5 years. It may not be for longer. But, yes, it will go back up. And so, even if you're upside down right now--let's say you owe $560,000 on a property that is now worth, who knows, $400,000--it will come back up. And if you sit tight, if you're able to handle the monthly payments, at some point it'll be worth more than $560,000. Meanwhile, you'll have had a place to live, and (unless you have a negative amortization or interest-only loan) you'll have paid down the principal a bit.

Besides, if you sold, you have basically two options: (1) Buy another property, or (2) Rent. I'm not an accountant, so this isn't financial advice, but in many cases it wouldn't make sense to buy another property, especially if prices are going to continue to decline...or at least remain flat. You can watch the prices decline or remain flat in your current home, without going through the hassle and expense of selling. Figure that, no matter what your house is worth today, the transaction costs of selling will chew up another 10% of your equity....approximately. Renting could be a possibility--I know some people who sold a year or so ago as a defensive measure and are renting now. It really depends on your comfort level. And, again, there are tax implications involved. So, you should talk to your accountant.

I do agree with Charles that if you've got one of those nasty loans that is going to reset, or you're in a negative amortization situation, you should try as best you can to get out of that and into a nice, solid, traditional loan.

Hope that helps.
2 votes Thank Flag Link Fri Feb 1, 2008
Don Tepper, Real Estate Pro in Burke, VA
I hate to be the bearer of bad news, but it's better that you hear the story as it is rather than as some would like it to be.

Unfortunately, the Hayward housing market has taken a pounding over the past year and there's no real relief in sight. According to the Bay East MLS, there is presently a 35-month supply of single-family housing in Hayward, and it is the worst-hit city in Alameda county by the downturn. Also, when people can buy houses for less than condos and townhouses, then they will (far more often than not.)

Most professional California real estate investors don't expect to see significant recovery begin until sometime between 2010 and 2012. Some believe it will be longer. During the four years after the past three housing down-turns, houses appreciated by a scant 2.78% on average, per year. Condos and townhouses will recover more slowly than will single-family detached houses.

If you're not yet underwater (unlikely considering when you bought,) consider selling NOW. If you are underwater and you're in an ARM or an Option ARM and you can come up with enough cash to refi, then don't wait. (No, I'm not in mortgages.) If it's just a matter of time before your mtge adjusts and you don't have the capital now to do anything about it, take heart in knowing that lenders are very willing right now to work with borrowers who can afford their present payment, but not an upwardly adjusting one.

Wishing you success,

1 vote Thank Flag Link Fri Feb 1, 2008
Don's advice is excellent.
My two cents is you need to be clear on why you are moving.
In this market, being focused on the result you are trying to achieve should be the governing force.
Definitely discuss your situation with a couple of Realtors (preferably ones that have experience with rental property) to figure out your options.

Time is of the essence. If you need it, read my blog on short sales and foreclosures.
0 votes Thank Flag Link Fri Feb 1, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
We can under stand the situation. Not only you , many many home owners are going through this slow and sliding price situation . Market may pick up within a couple year or more. If you can not wait, I can visit and will try to advise and help to find out the solution. Can contact 510 219 2845.
Web Reference:
0 votes Thank Flag Link Fri Feb 1, 2008
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