Hardworking Oakland family can't sell 'sweet little house' located in real estate 'dead zone'

The San Francisco Chronicle reports:

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.

It's only the beginning.