San Jose Foreclosed Homes for Sale Stabilizing Market
November 11th, 2009 by 
Joseph Smith
As San Jose foreclosed homes for sale get closed, the local market gets closer to stability, according to the chief economist of a real estate research firm. He further explained that the sale of foreclosure homes helps in cleansing out negative equity from the residential sector.
The research firm also said that the decrease in the drop rate of home prices in San Jose shows that the effects of foreclosures on home price levels has been sliding. It explained that home values in the July to September quarter actually climbed up slightly from the previous quarter.
During the quarter, home prices in Santa Clara County, where San Jose is located, decreased by 9.9 percent over the past 12 months, the smallest drop the county experienced this year. The decrease rate of 9.9 was significantly lower than the year-over-year decrease rate of almost 17 percent in the previous quarter and the decrease rate of 18 percent in the first three months this year.
The third quarter median of $561,600 marked an improvement over the past quarters and gave housing market participants hope that the impact of San Jose foreclosed homes for sale on home prices is weakening. In the July to September quarter, the pace of foreclosures in the area still rose, but the pace has substantially declined from almost 11 percent in the first 6 months of this year to only 2.7 percent during the quarter.
Quincy Virgilio, head of the Santa Clara County Association of Realtors, explained that sales of lower-priced homes could have been higher if there were more lower-priced units. He said that competition in the lower range is fierce.
Virgilio also said that the number of homeowners whose mortgages are underwater has dropped to 17 percent in the July to September quarter, down from around 22 percent in the previous quarter. The decline was driven by the increase in home values and the increase in foreclosure homes sold. As properties get foreclosed and resold, the properties are restored to their positive equity positions.
In Gilroy, the median home sales price increased to $382,800, a rise of 5.6 percent. In Cupertino, home prices climbed up to $964,300, an increase of 1.8 percent.
Additionally, area economists said that the expansion and extension of the tax credit program will further help the recovery of the San Jose market.
