Signs of life in California Real Estate
Despite a large number of foreclosures, lower rates of new construction, and a 41 percent decline in the median price of single-family, existing homes, there are signs that California’s housing market may be coming back to life.
MAKING SENSE OF THE STORY FOR CONSUMERS
• Foreclosures have helped lower prices and increase affordability. During the fourth quarter of 2008, 59 percent of the state’s first-time home buyers could afford to purchase an entry-level home in California. The favorable prices also are helping potential home buyers get off the fence. Sales of existing, single-family homes rose 81 percent in February to a seasonally adjusted rate of 620,410 on an annual basis.
• The director of Harvard’s Joint Center for Housing Studies predicts continued price declines in California, but at a slower rate, which generally indicates the end of price drops. One measure used to judge market trends is price per square foot. In Long Beach for example, the price per square foot increased 5 percent in February.
• The surge in sales has resulted in a drop in unsold inventory. C.A.R.’s Unsold Inventory Index stood at 6.5 months in February, compared with 15.3 months in February 2008. According to C.A.R. Chief Economist, Leslie Appleton-Young, a normal market is having a six- to seven-month supply of homes. California’s inventory now compares favorably with the rest of the nation, where there’s a 9.7 month supply of homes on the market, according to the NATIONAL ASSOCIATION OF REALTORS®.