California Real Estate

March 15, 2008 by  
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Southern California Real Estate

California s real estate market is one of the fastest paced and vibrant. Property here is traded so competitively, and with such high stakes, it’s no wonder that it has acquired this reputation.

A report on Californian house sales released in December 2007 showed that more than 25,000 condo unites and houses exchanged hands within that month alone. While the figure is impressive, it is in fact unchanged from the figures represented in November. It is also down more than 40% from November of 2006, when house sales were recorded at 43,400. Data shows that there has been a decline in house sales over the past 27 months. Decembers sales were also the lowest when compared to the records that began in 1988.

Average prices for houses went down from $412,000 in November to $400,000 in December, which approximates to a 3% decrease. The price drop shown in December is a 15% drop from December of 2006, when median prices were $472,000. A peak in median house prices was reached during the March to May period last year, where average home prices were $484,000.

Slow sales of high priced properties explain the drop in median house prices, which is also a direct result of instability within the credit industry. 17,500 homes purchased during December 2007 were bought with conforming loans amounting to $417,000. This is a huge decline of 30% from December of 2006, when the number of houses bought with the same loans only amounted to almost 25,000 homes. Taking jumbo loans into consideration, 4,600 houses in California were purchased for more that $417,000 in this manner. That, in itself, is a decline of 70% from December 2006, when houses purchased numbered more than 15,000.

There are other indications that the real estate market in California continues to move in different directions. Property foreclosures have reached an all time high, and adjustable-rate mortgage and multiple mortgage financing have declined sharply. Down payment values and flipping rates, however, have remained constant, and buying activity by owners who dont own the properties in question are on the rise.

The low level of house sales evidenced in December 2007 have caused many in the Southern California real estate industry to watch the market closely. While house sales in places such as Riverside, Los Angeles, and San Diego have gone up .5% from 13,200 in the previous month, it still represented a steep 45% decline from the same period the year prior, when house sales numbered a little over 24,200.

One real estate industry agent is reluctant to make any forecasts or predictions about which way the market will turn, as the current condition makes the market a free-for-all when it comes to financial situations. Despite this, many experts agree that real estate market will stabilize soon, and a clear picture will emerge. Until then, buyers and sellers are keeping a watchful eye on all happenings within the market.

Mentioned earlier is the fact that foreclosure is on the rise. Within the last quarter of 2007, mortgage default notices were at the highest level in 15 years. This increase in foreclosed properties is closely followed with depreciation of home values. Many homeowners find themselves in positions where they owe more on the mortgage than what the propertys actual worth is on the market. Large numbers of those forced into foreclosure feel the stress caused by high mortgage rates, loss of job or income, and even the desire to move to another state.

A factor important to consider is the decline in average house prices from a high of $484,000 in March 2007, to slightly above $400,000 in the latter part of the year. While this decline was partially caused by shifts in types of houses sold, this would have undoubtedly had a significant role to play in the rising number of homeowners who defaulted on mortgage payments.