Equity Home: Housing in California

The prices of houses are plummeting everywhere. The house price median in California has dropped 38% as compared to last year. Low cost of foreclosures has improved sales but the general drop in prices of the property is the principle reason for the decrease in home prices. The median price of houses and condos in California has decreased to $249,000 from a value of $402,000 in December. The median price indicates the price at which half of the homes sold for greater amount and the other half sold for lesser amount.

The California median price is the lowest since 2002 and it has dropped a record 49% since 2007. California sold 38,000 homes the previous month, which is an eighteen percent increase from November and a forty eight percent increase from December. The main players in the housing market now are the people hunting for bargains. They are buying foreclosures owned by banks and other financial institutions. 58% of the homes sold were foreclosures which are an increase of 24% as compared to the year before last. The bargain hunters are in frenzy and most of the banks and financial institutions just want to rid their books of these properties. People are therefore flocking to buy these homes.

California housing market is suffering due to

• Tighter credit markets and stringent rules.

• Predictions of further decline in home prices.

• Deterioration in economic crisis.

• Rise in unemployment rates.

The housing market would stabilize only once the economy stabilizes and these are both interdependent. House prices would hit bottom if the unemployment rate picks up, maybe this would allow for a turn in direction of the economy, housing market and unemployment rate. The 9 county San Francisco Bay Area recorded a 44% drop of prices, i.e. a drop from $587,500 to $330,000. It is a record low since 2000 when it was $320,000 and a drop of fifty percent from the peak value of $665,000 in 2007 summer.

The contra Costa County recorded a 50% drop to $252,000; Alameda County recorded 37% decline to $338,000, 42% decline in Solano County to $215,000 and 16% in San Francisco to $616,000. Sale of high end houses has reduced due to difficulty in getting loans. The jumbo loans have to be recovered for increase in sale of houses in the upper Bay Area. These loans account for more than sixty percent of the area’s real estate dealings. These deals only managed to be a mere 22% of loans given last month.

Only 20,000 homes were sold in southern California last month. This number is actually an increase of nineteen percent since November. December sales largely constituted foreclosures. They accounted fro 58% of sales conducted. The median home price fell from $425,000 (December) to $278,000 (January) in Southern California. This region of six counties saw a median home price of $505,000 when it peaked in 2007.

The future cannot be predicted and the operating instructions in the market are liable to change. Hopefully it would be for the better of the housing market and the country.