Alhambra Real Estate
Alhambra Homes For Sale - Investing in Real Estates of Alhambra, CA

Real Estate in Alhambra
By Lee Lieberg

September 17, 2007

The buzz these days in the real estate world is the lending crisis in the sub prime market. I am asked every day what is a sub prime loan and what is the effect on my home value in Alhambra. There is good and bad news in the answer.

Sub prime loans are generally loans made to borrowers with a weaker credit history or higher debt to income ratios that have a higher risk of default. The bank then charges a higher interest rate on these loans to offset the risk. These loans inherently tend to be made to first time buyers or those who refinance leaving little equity. As prices were climbing, troubled borrowers could sell their property and repay the bank. Now that national prices are sliding, those same borrowers don’t have enough equity to repay the bank forcing either a short sale or foreclosure.

The good news is Alhambra has fewer first time buyers, and the typical home owner has more equity in their home because they have either lived in it for some time or made a large down payment with proceeds from a previous sale. We have not seen the foreclosure activity that other markets have been experiencing. Therefore, due to our proximity to L.A., quality of life and our improved schools, prices in Alhambra have remained relatively strong.

Now, here’s the catch. The current situation is changing the financial markets in both a regulatory and investor sense. This is leading to more difficult requirements to obtain a loan and fewer qualified buyers. This reduction of qualified buyers will lower demand. While Alhambra hasn’t been directly hurt by sub prime loans, the ripples from the changes to the financial markets are likely to affect every market.

Here are the recent numbers for Alhambra:
 

*Data was obtained from California MLS Alliance and deemed to be reliable. Lee Lieberg can be contacted at lee.lieberg@dilbeck.com.