California housing Freefall

Posted by Kendall Harmon

Signs of distress are piling up in the California housing market, where prices are falling at three times the national rate of decline.

--Statewide, median sales prices fell by a stunning 26% in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed's interest rate-cutting campaign "will have little near-term direct effect on the housing market."

--In the San Fernando Valley, losing a home to foreclosure is now almost as common for families as buying a home.

Read it all.

Filed under: * Economics, PoliticsEconomyHousing/Real Estate Market

12 Comments
Posted March 26, 2008 at 1:17 pm [Printer Friendly] [Print w/ comments]



1. francis wrote:

This has got to happen sometime.  House costs in California are not realistic, way over priced.

March 26, 2:39 pm | [comment link]
2. andy_crouch wrote:

Read the comments on that blog post very carefully. Median sales prices can be skewed by a number of factors. As one commenter put it, just because median prices fell 26% does not mean that a home worth $1M last year is now worth only $740K. Not at all. What it almost certainly means is that a glut of foreclosed, fire-sale homes have come on the market and found buyers only at very low prices. The implications for more stable parts of the market can only be guessed.

March 26, 3:19 pm | [comment link]
3. Br_er Rabbit wrote:

Then I said, “Lord, how long will this go on?”

And he replied,

Until their towns are empty, their houses are deserted, and the whole country is a wasteland;
until the Lord has sent everyone away, and the entire land of Israel lies deserted.

Isaiah 7:11-12 (NLT) 

Let us pray that our land is not under judgment for deserting the Lord, as was the land of Israel.

The Rabbit.

March 26, 4:02 pm | [comment link]
4. Cennydd wrote:

The bubble had to burst sooner or later.  Declining home prices…....while they certainly do hurt sellers who had hoped to make a killing selling their homes…....are helping first-time buyers find a home they can afford, for a change. 

I blame part of the problem, though, on a glut of new homes….....which should never have been built….....which also indicates an overconfidence on the part of developers and property owners who have been selling their land for many times its original value. 

In other words:  GREED!

March 26, 5:26 pm | [comment link]
5. Bill Matz wrote:

The article reflects comments by an uniformed reporter, which will sadly be used by an uninformed public as a basis for action. As I have noted repeatedly, and as Andy correctly points out above, the median cannot be used a a measure of overall price activity, primarily because the median house is different every month. The primary factor causing the drop in median now (at least in our area of CA) is the substantial amount of “bottomfishing (=bargain hunting) going on as investors re-enter the market buying lower-priced properties that will now cash flow. This causes the median (middle of the market) to move down, even if prices are going up.

March 26, 5:37 pm | [comment link]
6. Africanised Anglican wrote:

Br_er Rabbit wrote:

  Then I said, “Lord, how long will this go on?”
  And he replied,
  Until their towns are empty, their houses are deserted, and the whole country is a wasteland;
  until the Lord has sent everyone away, and the entire land of Israel lies deserted.
  Isaiah 7:11-12 (NLT)

Let us pray that our land is not under judgment for deserting the Lord, as was the land of Israel.

The Rabbit.

‘Under judgment’?  The Golden State of KalaPorneia?  Say it ain’t so!

March 26, 7:13 pm | [comment link]
7. John Wilkins wrote:

I think lots of people stand condemned.  There is enough envy, sin and greed to go around.  Perhaps assuming we could deregulate and rely on the goodness of people was not the best way. 

But the question remains, while we stand righteous and find the right person to blame, do we offer compassion?

March 27, 12:55 am | [comment link]
8. Katherine wrote:

On a recent visit home, I heard that the new development nearby, with homes all over $1 million, has at least three houses in foreclosure.  None in our neighborhood, with more reasonably sized and priced properties.  People bought what they couldn’t afford on loans with unreasonable terms, and now are losing what equity they had.  Their lenders are also losing for having made the bad business decision of extending these preposterous loans.  Bad judgment and greed all around.

March 27, 3:41 am | [comment link]
9. CharlesB wrote:

According to the CAR, “The median sales price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2 percent decrease from the revised $554,280 median for February 2007.” The February 2008 median price fell 4.8 percent compared with January’s revised $429,790 median price.

Who in the world was buying these houses in the first place.  How can they afford a normal 80% mortgage payment, let alone 100% financing??

March 27, 6:06 am | [comment link]
10. Cennydd wrote:

CharlesB, have you ever heard of the group of people called “yuppies…..young upwardly-mobile professionals?”  The “I want it ALL, and I want it NOW generation?”

March 27, 10:51 am | [comment link]
11. Br_er Rabbit wrote:

Yes, Cennydd, and let’s not forget that famous subset of the Yuppies: the Dinks (Double Income, No Kids).
The Rabbit.

March 27, 12:29 pm | [comment link]
12. Cennydd wrote:

Yep, my wife and I know a few of ‘em…...and they’re in ‘way over their heads, and struggling.  OUR two kids are grown, on their own, and bought homes they could afford.  Ditto for us…..and we live pretty well, thanks very much…..I will admit that.  Others in our town, however, aren’t as fortunate as us…..sadly.  We’re retired with a decent income, and that makes a difference, I suppose.

March 27, 1:43 pm | [comment link]
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