Bargain home prices attract investors, novices

The San Francisco Chronicle reports:

Underlying all the market changes is the prevalence of bank-owned foreclosures being unloaded at a discount. Two years ago, only 2.6 percent of all existing homes that changed hands had been foreclosed on in the prior months. This year, more than half of the existing homes that sold in January and February were foreclosures.

Here is a look at key market elements that have been radically altered over the past two years:

-- Pricing. The Bay Area reached a peak median sales price of $720,000 in spring 2007. In February, the median was $295,000. That doesn't mean that all homes lost half their value - although many did see appreciation erode significantly - but it does show a major shift in the composition of homes being sold.

You'll want to read how the FHA is encouraging massive leverage.