How's It Going: Housing

If you’re buying or selling a home in 2011, you can expect to see more houses on the market.

You can also expect a higher percentage of those homes to be foreclosures or short sales.

But don’t count on prices rising or banks to start handing out an abundance of loans any time soon.

That’s the conflicting news greeting people in the real estate market as 2011 emerges.

The housing market has been in disarray for more than two years now.  Foreclosures have sprouted across the country with few locales spared.

The Bay Area reported a 5 percent drop in foreclosures last year. Still, there were 51,525 houses in some stage of foreclosure, according to RealtyTrac.com.

In Alameda County last month, there were 1,000 notices of default, the first stage of the foreclosure process. That was a 19 percent drop from November and a 16 percent decrease from December 2009.

On the other hand, federal officials reported last week that 5 million Americans are at least two months behind in their mortgage payments.

Those and other figures were on the minds of people attending a Tri-Valley Housing Opportunity Center seminar in Dublin earlier this month.

Milly Seibel, the organization's executive director, teaches classes that inform prospective home buyers on credit, loans, the home buying process and other important topics.

"It really helps to understand," she said.

Seibel does see the real estate market picking up again in 2011.

"I think homeowners are feeling more comfortable and are ready to move on," she said. "They feel like they're not trapped in their homes anymore."

Seibel said a rise in the number of foreclosures should help increase housing inventory and keep prices from rising too rapidly.

"One person's misery is another person's gain," she said. "The foreclosures will provide a new wave of affordable housing."

She also expects banks to increase the number of home loans they approve.

"I think banks are starting to loosen up their purse string," Seibel said. 

Two people in her class at the Dublin library were cautiously optimistic.

Samantha Godsoe, 22, and her 26-year-old boyfriend live in separate homes in Livermore. They are thinking of buying a place together.

Godsoe said she's a little overwhelmed at all the details and a bit shocked by home prices, even though they are at record lows. However, she and her boyfriend are feeling better about the market.

"We're not in a hurry, which is a nice thing," she said.

Kevin Heller, a teacher at Ohlone College, rents a place in Pleasanton and would like to become a homeowner.

He sees an expanding selection of houses, reasonably affordable prices and low interest rates.

"My impression is this is a great time to buy a house," Heller said.

Lauren Holloway, a Realtor with Sotheby’s International Realty in the nearby San Ramon Valley, is also cautiously optimistic.

She expect banks to loosen up on the money supply as the year unfolds. However, she said they still will have tight requirements.

“It won’t be like a few years ago when they just checked to see if you had a beating heart,” Holloway said.

Holloway also expects the supply to increase as 2011 progresses.  Part of the reason will be banks starting to put foreclosed homes on the market. Another will be home sellers and buyers feeling a little more confident.

Holloway expects higher-end regions such as the desirable neighborhoods of western Danville and Alamo to do well.

“That just goes back to that old saying – location, location, location,” she said.

Interest rates are expected to rise during the year and Holloway expects a slight bump in home prices.

For the most part, that is good news for home buyers.  They can purchase a nice house for a price well below what it was valued three years ago.

However, the basement prices can also instill some unrealistic expectations for some prospective home owners.

"Buyers have it in their heads that they're going to get some great deal out there," Holloway said.

Prices, on the other hand, can be a major obstacle for home sellers.  Some are "under water," meaning they owe more on their home than what they have in equity. Others simply can't get enough out of their house to buy a decent home to move into.

The lack of bank loans is a problem for home sellers, too. You can't sell your house if the buyer can't get approval from a lending institution.

Nonetheless, the mood in most sectors of the real estate business is better than it was a year ago.

"There are a lot of opportunities for people who are looking to get into the market," said Seibel.