Foreclosure rarely occurs at the top of the housing market, but on Monday a revamped North Berkeley Mediterranean-style home priced at over $2 million in 2008 will be headed to foreclosure auction.
Although Berkeley’s high-end real estate market has been resistant to symptoms of the national housing slump since 2005, sales at a loss for the lender and foreclosures such as this one are now slightly more prevalent, even as buyers have been creeping cautiously back into the market as of late 2009 and the Bay Area is expected to slowly stabilize.
“We’ll see a little bit of both-stabilization and foreclosures,” said Anne Van Dyke, a broker associate with The Grubb Company, an EastBay real estate agency. “Some people are coming onto the market while others can’t afford to stay in their houses. People are feeling a little tenuous.”
Since 2008, instances in which a borrower cannot pay the mortgage loan on his or her property and a lender sells the property at a moderate loss have increased in Berkeley as a final effort to avoid foreclosure, according to Bill McDowell, co-owner of Berkeley Hills Realty.
Property values in the Berkeley, Albany and Rockridge housing markets-which are the strongest in Alameda County-have declined 5 percent per year from their highest point in 2005, McDowell said.
“Since the market has gone down, people are reluctant to sell for less than what they think their house is worth,” McDowell said, adding that because of this, it is difficult for buyers to purchase better homes, when five years ago they could put a down payment on a new house using a type of interim financing that is no longer available.
The federal reserve has kept interest rates “extremeley low” in an effort to support housing credits for first-time buyers and foster housing stability, according to Robert Helsley, UC Berkeley Professor and Chair in Real Estate Development at the Haas School of Business.
“We expect to see the markets stabilize, the foreclosures to go down, the real estate owned by banks to go down, and for prices to slowly firm up,” Helsley said. “But we don’t expect dramatic returns. Activity will remain pretty low-particularly price appreciation-for the next while.”
Barbara Norkus, broker and owner of Capri Real Estate Services, said the entry-level, first-time buyer market in Berkeley has been bouncing back slowly since January.
At the bottom of the market, the Berkeley Housing Authority-a rental assistance program-has been met with more demand for services to low-income families since the beginning of the economic crisis in 2008, according to Rachel Gonzales-Levine, a management analyst for the authority.
“Anecdotally, we have more and more families that are housed in properties facing foreclosure calling us with lots of questions,” Gonzales-Levine said. “They want to know if they have to move and what laws are applicable to them.”