California Home Prices Sink
February 28, 2008
Data from January on the housing market in California has revealed that home sales in the state have plummeted to a 20 year low.
Recently, Data Quick Information Systems reported that a mere 19,145 homes were purchased statewide last month. This is a dramatic drop of 41 percent from January 2007. It is also a drop of nearly 25 percent from December 2007 sales.
The bad news does not stop there. It was also reported that the statewide median home price dropped in January 2008 to $383,000. This represents a decrease of nearly 17 percent from $462,000 a year earlier. This also represents a 5 percent decrease from December 2007. Median home prices hit a high mark for California last spring at $484,000.
All of this comes as the nation faces a weakening housing market caused by sub-prime loan foreclosures and increased credit standards. While California is seeing historic lows in median home sales and prices, Detroit, Michigan is seeing the highest levels of foreclosures. Few, if any, communities are immune from the rising crisis.
One aspect of the overall problem seems rooted in the Catch-22 cycle. As more homes go on the market, prices decrease, but as banks and other lenders tighten credit standards to protect themselves from further defaults, fewer people are able to buy these same homes that are on the market. And as fewer people are able to buy, home prices and home sales continue to fall off.