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Has San Leandro Real Estate Bottomed Out?

A report from Oakland showing that investors gobbled up foreclosures raises the question: what's happening with real estate in our town? And are investors to thank or blame?


An analysis of real estate data from Oakland yielded the following findings:

  • there were 10,508 foreclosures from October 2007 through October 2011;
  • 42 percent of these properties were acquired by investors;
  • of the 30 largest investors, two-thirds were from out of town.

The analysis raises such questions as:

  • are the odds stacked against owner/buyers and families;
  • what does it mean if a large swath of Oakland is absentee-owned;
  • and what would have happened had Congress given bankruptcy judges "cramdown" powers over mortgages (to reduce the principal owed to current market value)?

But there are other ways of thinking about the Oakland findings. These include:

The Oakland study is new. A comparable analysis for San Leandro is not currently available.

Meanwhile, here is an educated surmise from one San Leandro real estate pro. I will add other as available. Please add your thoughts in the comments below.

Earle Shenk: My viewpoint - The majority of the Oakland properties purchased by investors were in East Oakland where values were hit the hardest by the recession, easily in excess of 50% loss of equity.

San Leandro has no comparable area, although the large, older subdivisions were hit harder than others: Davis Tract, Marina Faire, Washington Manor, etc. I'd say close to 40-45% loss of equity. There have been numerous all-cash offers placed on homes priced $300,000 and below, 40% or more investor-purchased.

As an example, with the valuation hit Washington Manor took, yet having a top-tier Chinese Baptist School, all-cash offers are now the norm.

Homes that sold for $500,000+ in the heydays are now listed for $299,000-349,000.  List prices have easily gone up 15-20% in the last 3-4 months.

Investors were the first to see the market was at the bottom and starting to pick up.  I sold a 2-bedroom home in the Davis Tract, listed according to comps at $229,000, for $268,000. A fixer on the Oakland side of Durant, priced at $109,900 sold for $148,000, all-cash and owner occupied.

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David June 30, 2012 at 07:12 PM
Hey, my 9th grade-educated great-grandfather got his house in Oakland for the princely sum of $3500 on his kingly annual income of $1800, and probably figured out how to vote that way! Just think if houses these days were priced at 2x income...ok, 3x if incorporating amazing technological improvements like dual-paned windows and central heating. Median price in the same 'hood in Oakland would be $140-$210k for a decent house instead of $400k+.
Paul Vargas June 30, 2012 at 08:02 PM
Well, David, in other parts of the country, such as Texas, you have homes priced around 2x earnings. A couple weeks ago, a woman was telling me about her friends who moved to Texas, bought a house on 20 acres for $200,000 and were paying....$4000 a year in property taxes! The woman says; "that's way more than we're paying." I said; "yeah, but there's no state income tax and you're paying $4000 property tax on 20 acres not 5000 square feet." In 2000 when I was collecting signatures for the Repeal of the Property Transfer Tax I was in Washington Manor and stumbled across this old man. Lived on Avon or Hubbard, one of those streets. Well anyway the old coot tells me; "you Republicans are all for the rich. You like your man Reagan, but Clinton cares for the people" I looked at this senile fool and told him; "Look grandpa, I don't need some old man who paid $10,000 for his house 50 years ago telling me about economics, are you too stupid to realize that if you or your kids sell your house you have to pay this tax?" And the blubbering fool replies; "oh you say you'll save your money but you won't, you'll spend it. You all do." Needless to say, this waste of oxygen and I weren't ever going to see eye to eye. No doubt in my mind he was a retired government worker.
David June 30, 2012 at 09:19 PM
Yep, those places aren't land constrained by geography or (as is the case here) regulations. Hence the pricing according to a price/income ratio, which curiously, in those places ranges between 2-3 for the main. Here it's according to rents, and since it costs less to buy at this point than rent in a lot of areas, it's time to buy. And the rents are increasing, so it's a signal that a return to at least some R.E. appreciation around here is pretty much a sure thing.
Paul Vargas June 30, 2012 at 10:09 PM
California isn't constrained by geography. We are the second largest in the lower 48. However, we are constrained mentally by people who think they're on some dry, rocky island off the toe of Italy or a denuded island in the Atlantic. Most of the semi-literates here forgot that the war is over, it's time to get parts for their heads.
David July 01, 2012 at 12:49 AM
Yep, Paul. Preaching to the choir again. As I noted, it's all man-made constraints. But constraints they are and that's why we're priced on a price/rent basis.


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