Double Dip Fears Haunting Counties in California

The crawling up of price of residential houses in some regions of East Bay caused some to think that the collapse in the market was now history. But trends indicate that the double dip factors are showing up.

Unemployment troubles came close on its heels as a chain reaction set it. The lengthy intense recession added insult to injury. The scars are refusing to heal. Experts feel that the hesitant increase in prices was largely due to artificial intervention by the government through stimulus packages, tax credits and the like but this tendency was not sustainable as the health of the economy continues to sag in general. Unemployment is at an all time low and without money in their pockets people can neither pay mortgages nor purchase new houses. Lending too has failed to pick up despite bailout of banks.

Alameda County saw price or residential units increase by 0.06% in the last quarter of 2009 as compared to the previous quarter. It remained the same in December compared to November after having climbed strongly during the last eight months. The median price of homes in Alameda County at the end of 2009 was $427,484 as per the findings of Zillow.com. The median sale price is calculated to be the point at which half the houses are sold for more and half the houses sold for less.

Contra Costa County showed 0.09% increase in the last quarter of 2009 with the median value being $338,652. The amount remained unchanged in December from the previous month. It is being apprehended that both the counties of Alameda and Contra Costa would be experiencing a double dip phenomenon. In April the tax credit scheme launched by the Federal Government is scheduled to stop and this will reduce even more the number of potential purchasers. Thus for the next few months home values are likely to fall further. But the hope is that the fall will not be as severe as it had been in the previous two years.

In a double dip home prices fall for a minimum of five months at an yearly rate of 1% and this is followed by a minimum of five months of price appreciation of at least 1%. Then once more for a period of five months or more the prices fall within the span of a year that separates the depreciation dips.

There are other areas in California poised for this double dip facet– Santa Cruz, San Diego and Ventura. The good news is that the numbers of those having gone underwater with mortgages being higher than worth of the property have decreased

Posted by Eureka Expert on Feb 8 2010. Filed under Economy, Housing. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry