Market Summary The majority of the Real Estate Sales activity in West County is from Bank Owned Properties.  These are properties that have been foreclosed on, and are currently owned by the bank (hence 'Bank Owned or REO 'Real Estate Owned'[by the bank]).  The bank sells these properties through an Asset Management Company who uses a local realtor to manage the listing.  A Bank Owned Single family home sale is a very similar transaction to a normal Real Estate Sale with the main difference being additional disclosures to be signed by the buyer.  Typically, Banks will not do any repair work - Strictly 'As Is' Sales. This may present a problem if the buyer is attempting to purchase the home with an FHA loan.  These loans often have minimal structural condition requirements to close.   A Bank Owned Residential Income Property is difficult to finance due to the fact that most of the time the building is vacant.  Banks will not loan on a vacant building.  This means either all cash purchase or a large down payment with a hard money loan.  The property can be refinanced after it is fully rented. There are a high number of 'Short Sale' properties on the market.  These are properties where the owner owes the bank more than the value of the property and is trying to work out a deal where the difference is forgiven.  Most of these end up going to Foreclosure because of the difficulty in making the sales transaction work while the bank is involved in approving all aspects of the sale. Property in desirable areas are more recession proof, and thus from Investment Income from the Property versus the Cost of Property(Cap Rate) is much lower.  Lower Cap Rate = Lower Return on Investment   Professional Speculation   In general, the Single Family Homes and smaller apartment buildings (8 units and below) have been tied to the slumping prices since the Summer of 2006.  This is especially true in cities where the foreclosure rate is high (i.e. Richmond & San Pablo).  Surrounding areas are down, but not nearly as much.  Some areas have barely felt any recession in pricing (i.e. El Cerrito, Albany).  The offsetting forces of higher rental demand have kept resale value stable for these cities.     Larger properties are following a similar trend, but have not seen as much price recession.  However, the activity on these types of properties is very slow.   This is mainly because investors and not finding good deals in this realm.   I predict that we are in for another year or more of Price instability tied directly to the massive amount of foreclosure property set to hit the market over the next 18 months.      With that said, good properties are selling.  Investors are paying up to 75 percent less than prices 3 to 4 years ago and finding positive cash flow opportunities with 20% or less down payment.  This has not been possible in nearly 10 years!  This sounds infomercial-ish, but very true.  The logic here is that even if prices go down, since the property is operating in the black, it does not matter.  As a seasoned real estate investor, you should plan on a 7 to 10 year hold.  Over this time there is a strong likelihood of doubling the value of these investment properties because of getting such a great deal on the purchase side.   If you would like to hear more local information, please e-mail or call me directly to discuss your need and wants.