The Oakland, Calif., mortgage market has slipped dramatically on the Mortgage Bankers Association's Hot Mortgage Market Index.
Oakland plummeted from 39th place to 78th on the ranking, which is meant to measure an area's potential or expected strength for future purchase origination activity.
Oakland is also ranked 78th in housing affordability, with the average existing house price at $292,000 and the median annual family income at $58,868, according to the association.
"Housing affordability is low, and the population has declined," said Brian Carey, an economist for the association. "Incomes aren't supporting house prices in Oakland."
The association projected a meager 0.5% increase in home sales this year for Oakland, compared with 12% nationally. "There is a definite outflow of residents and therefore, less of a housing demand," Mr. Carey said.
Carl Blunt, vice president of community development for an Oakland branch of Washington Mutual Inc., Seattle, said he thought the credit- scoring system, developed by Fair, Isaac & Co., and borrowers' socioeconomic status played a big role in the area's slipping mortgage market.
"About 90% of my borrowers are minorities of low to moderate incomes with very low Fico scores," Mr. Blunt said. "We used to have a very good outreach program to those areas and advise people who were paying $750 a month rent that they could buy a home for that much money. Now the loan programs are Fico-driven, and they won't qualify."
Diane Cimarusti, Norwest Mortgage Inc.'s regional manager for Northern California, agreed that Oakland residents' earnings affected mortgage lending.
"Oakland is a difficult market, because you have very upper and very lower areas, with nothing in the middle," Ms. Cimarusti said. Oakland residents "are less prepared, less educated for homeownership."
Ms. Cimarusti estimated the average loan amount for Oakland to be $190,000 30-year fixed loans.