In some ways, the Sanchez family embodies a real estate success story.

Two brothers, Antonio and Pedro, and Antonio’s wife, Isabel, bought a three-bedroom home in the East Oakland flatlands five years ago. They saved up a 3 percent down payment from the brothers’ jobs at a vegetable market and Isabel’s part-time work cleaning houses.

They have lived together in the remodeled Craftsman on a street of tidy bungalows since then. They rent out a small apartment over the garage to help with the mortgage.

The house is now worth $425,000, $100,000 more than they owe on the mortgage.

Now the Sanchezes want to follow the same trajectory as other first-time homeowners, trading up to a bigger house near their relatives in Woodland (Yolo County), in a better neighborhood with good schools for Antonio and Isabel’s two young children.

But the chances that they can sell their home, which has been on the market for four weeks, are slim.

“Luckily, they have equity,” said their Realtor, Mary Dresser of Prudential California Realty. “But if they can’t sell, they don’t really have any equity, or at least they can’t gain access to their equity.”

Their house is in a real-estate dead zone, in terms of both location and price.

Pricewise, entry-level buyers have dropped out of the market because they can’t get financing. In the wake of rising defaults and delinquencies on subprime mortgages, people who have tarnished credit, can’t make a down payment or can’t document their income find doors slammed shut when they apply for mortgages.

“Everything below MacArthur (Boulevard) died when the subprime fiasco hit,” Dresser said. “I could see (this house) plain not selling. The buyer pool has dried up.”

Even cutting the price wouldn’t help, Dresser said, unless it were a “fire-sale” slashing of $100,000. “Then they’d have no house and no money,” she said.

Dresser showed a printout of all the current listings within a half-mile radius. There are 18 homes for sale, and one in escrow. Since May, only two homes in the neighborhood have sold. By contrast, there have been 65 sales since May of Oakland homes priced above $1 million, she said.

Statistics across the Bay Area and California have borne out that dichotomy: More-expensive homes are still selling briskly, while affordable homes are in a stagnant market. That has caused the median prices to rise because the mix of homes sold has shifted to the higher end.

“It’s frustrating,” said Antonio Sanchez, an open-faced man who looks younger than his 33 years, as his 3-year-old daughter Ximena stacked up DVDs on a coffee table in the living room he painted and tiled. “I want a better area for them; they grow up so fast.”

Sanchez said he was robbed at gunpoint on the street last year. When the children want to play outside, the family drives to a park 20 minutes away where they feel safer.

Being near relatives is another concern. The Sanchez brothers’ parents, grandfather and some siblings live in Woodland.

“My mom and dad are getting older; I want to be close with them,” Sanchez said.

Then there is the cost of living in the Bay Area.

“I have been 13 years with two jobs,” Sanchez said. He drives a truck days and works as a prep guy at a pizzeria some evenings. In Woodland, he could afford to have just one job.

The family, which refinanced one time, has an adjustable-rate mortgage on the home. It was $1,800 a month for two years, but three months ago it spiked to $2,800. They can manage that, but it’s a stretch. In nine more months, it is scheduled to rise again.

“This is a postcard-perfect sweet family and a postcard-perfect sweet little house,” Dresser said. “They are regular, hardworking people not able to achieve their goals.”

Source:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/27/MNGERNJ80.DTL&hw=real+estate&sn=003&sc=905