South Bay Homes and Real Estate

Good News for South Bay & Torrance

Torrance and the South Bay in general have not seen anywhere near the grim drop in home value reported in the national news.

Although a certain number of markets were able to make it through the market collapse relatively unscathed, certain areas have been hit harder than others. Two markets near the bottom of the scale in terms of prosperity are Detroit and Cleveland. However, these two markets are among many others that are essentially in free fall with no visible market redemption coming anytime soon.

Generally, the most volatile markets are those that feature numerous foreclosure homes. Other factors that influence certain areas are the loss of jobs and halted economic growth. Areas where the supply is outpacing the demand are in the midst of additional issues. The huge rise in property values a few short years ago are also causing problems in today’s market.

In the pinnacle of the real estate boom, these specific markets routinely saw home values double and triple. Once the bubble burst, however, the prices began to rapidly decline, and they have not hit bottom yet. Also, adjustable mortgages add another layer of problems.

During the strongest years of the housing market, prices were skyrocketing and those purchasing homes would often accept an adjustable rate mortgage to take advantage of the low interest rates. This practice was especially common in locations where first time owners struggled to afford the rising prices. (Of course, Torrance home buyers and South Bay home buyers were hardly immune to this temptation….but the practise was not as wide-spread).

Subprime mortgages were also more prevalent and more utilized in these areas. The extremely low interest rates motivated many people to purchase property that could not really afford. The problem was that many of these buyers did not have excellent credit ratings. The loans they received were adjustable rate, subprime mortgages. When the market started weakening, the interest rates began rising. Currently, many of the buyers that accepted adjustable mortgages cannot afford their payments. Consequently, foreclosures are happening much more frequently.

Economics and Real Estate

Economic issues in certain locations have aided the market problems. As layoffs rise, so do foreclosures and people selling their homes.

Currently, the worst real estate markets in the country are: Jacksonville, Florida, Riverside-San Bernardino, New Orleans, Detroit, Cleveland, Miami, Tampa, Las Vegas, Sacramento, and Phoenix.

Specifically, Sacramento has undergone a drop in property value that greatly exceeds the average for other markets. As with many other markets faced with the same scenario, Sacramento’s downfall was a market that grew too fast and fell too quickly. Median home prices in Sacramento are much higher than comparable markets, which is a huge negative considering all the real estate available.

Despite Sacramento’s problems it is not in as much trouble as Detroit, which features average price drops of over 7%. The driving factor in Detroit is all the former autoworkers that have been laid off. Cleveland is struggling too, as it faces similar, less severe problems, as Detroit.

Though these markets will continue to struggle into the near future, certain markets are actually performing at a relatively healthy level. Seattle, for example, has seen a 9% rise in home value, with Raleigh, North Carolina and San Jose, California posting similar numbers. San Francisco is close to these cities, seeing a 7% increase in the past year.

Thankfully, the South Bay and Torrance real estate continues to be somewhat immune to the national problems. Aerospace and entertainment industries continue to bring people to our area. While many Torrance home sellers are concerned Torrance home buyers are now in the driver’s seat. If you are in a position to benefit from some of the lowest home prices in recent memory call me immediately at 310-809-0202.

Learn about Torrance Real Estate Agent Rocky Rockwood.