Still Plenty of Potentail Buyers - for lower priced homes that is

My Comment: 

It is probable that there will continue to be a steady flow of "distress" sales coming to the market (either "short sales," where the lender agrees to let the home owner sell for less than the mortgage amount, or bank owned, where the lender has foreclosed and put the property up for sale. And these homes will continue to sell at a brisk pace, as there are a good number of qualified buyers.

Here are the major factors:

1. 2 or 3 years ago, when homes were not affordable for folks earning the median income in this area.  many fell into the trap of buying with adjustable mortgages with low teaser rates to get them into the home. They were told that the home would continue to go up in value and they could refinance the mortgage before it would adjust up. Of course, that did not happen. So now over 10% of local mortgages are past due on their payments. 

2. Even though a lot of first time home buyers took advantage of the recent government subsidies and bought homes, there is still a good number who can afford to buy now. Please see the article below:

 

Nearly two thirds of Sonoma County households can afford starter homes.

by real.estate

Sixty-two percent of Sonoma County households could have qualified to buy an entry-level home during the first three months of the year.

A buyer would have needed a minimum household income of $51,660 in order to buy that starter home, which the California Association of Realtors pegged at a price of $306,290. The group set the price of an entry-level home at about 85 percent of the county’s median sales price.
The percentage of potential households was little changed from a year earlier, when 63 percent could afford to make such a purchase.
For California, 66 percent of households could afford a starter home at an estimated cost of $246,270. That compares with 69 percent who could purchase such a home in the first quarter of 2009.
The typical state buyer needed a minimum annual income of $41,540. That was $3,910 greater than a year earlier, when the minimum qualifying household income would have been $37,630.
For Sonoma County, the estimated monthly house payment, including taxes and insurance, would have been $1,720. That assumed a 10-percent down payment and a mortgage with an adjustable interest rate of 4.33 percent.
Fifty-three percent of Bay Area households could qualify to purchase a starter home, compared to 62 percent a year earlier.
The association reported that the High Desert region was the state’s most affordable area, with 84 percent of households able to purchase a starter home. San Luis Obispo County was the least affordable in the state at 52 percent.
— Robert Digitale