| The California Real Estate market is one of | | | | do not occupy the properties in question is |
| the fastest paced and vibrant in the world. | | | | on the rise. |
| Nowhere else is property traded so fiercely | | | | |
| and competitively and at such high stakes as | | | | In Southern California, the extremely low |
| in this state. | | | | level of house sales in December 2007 has |
| | | | caused many in the real estate |
| A recent report on the number of house sales | | | | industry-sellers, buyers, and lending |
| in California, which was released in December | | | | institutions included-to watch the market |
| of 2007, showed that more than 25,000 condo | | | | closely. While the number of new houses sold |
| units and houses-both brand new and | | | | in Riverside, Los Angeles, San Diego, San |
| resale-changed hands in that month. As | | | | Bernardino, Orange County and Ventura went up |
| impressive as that figure is, it was in fact | | | | .5% from the previous month-about 13,200 from |
| virtually unchanged from the house sales | | | | slightly more than 13,100 in November-this |
| figure in November, and is actually down more | | | | still represented a steep 45% decline from |
| than 40% from November of 2006, when house | | | | the same period the previous year, when |
| sales registered at 43,400. Records show that | | | | houses sold numbered slightly more than |
| there has been a steady decline in house | | | | 24,200. |
| sales over the past 27 months, and that | | | | |
| December's sales were the lowest for that | | | | One real estate industry analyst has declined |
| particular month ever since records were | | | | to make any forecasts or predications about |
| first kept in 1988. | | | | which way the market will go in the next few |
| | | | months, saying that the present instable |
| Median prices for houses also went down | | | | condition of the market has made it |
| almost 3%-or to just over $400,000 in | | | | impossible to predict which way things will |
| December-from about $412,000 in November. | | | | go. Many experts agree however that the real |
| This price represents an almost 15% decline | | | | estate market will stabilize soon and that a |
| from December of 2006, when the median price | | | | clearer picture will emerge. Until then both |
| of houses was about $472,000. The peak in | | | | buyers and sellers are keeping a watchful eye |
| median house prices was reached in the period | | | | on the proceedings. |
| of March to May last year, when the price of | | | | |
| houses averaged around $484,000. | | | | We mentioned earlier that foreclosure |
| | | | activity is on the rise, and indeed during |
| This drop in median house prices can be | | | | the last quarter of 2007, mortgage default |
| explained mostly by the slow sales of high | | | | notices were at its highest level in 15 |
| priced properties, which in itself is the | | | | years. Much of this increase in foreclosed |
| direct result of instability in the credit | | | | properties goes hand in hand with |
| industry. 17,500 homes purchased in | | | | depreciation of home values. Many homeowners |
| California in December 2007 were bought with | | | | have suddenly found themselves in a position |
| conforming loans amounting to $417,000, which | | | | wherein they owe more on the mortgage than |
| is a huge decline of almost 30% from December | | | | what the property is actually worth on the |
| of 2006, when the number of houses bought | | | | market. A large number of those who have been |
| with the same loan amounted to almost 25,000. | | | | forced into foreclosure may have felt the |
| With regard to jumbo loans, 4,600 houses in | | | | pressure of high mortgage rates, the loss of |
| California were purchased for more than | | | | income or even the need to move to another |
| $417,000 in this manner, which is a decline | | | | state. |
| of a whopping 70% from December 2006, when | | | | |
| houses purchased number more than 15,000. | | | | One factor that can explain this phenomenon |
| | | | is the decline in median house prices from a |
| Other signs show that the real estate market | | | | high of $484,000 in March of 2007 to just |
| in the state continues to move in different | | | | slightly above $400,000 in the latter part of |
| directions. Property foreclosures are at an | | | | the year. Although this decline was perhaps |
| all time high (we will discuss this in | | | | partially caused by the shift in the type of |
| further detail later on in this article), and | | | | houses that were sold, this would have |
| both adjustable-rate mortgage and multiple | | | | undoubtedly still had a significant role to |
| mortgage financing has declined drastically. | | | | play in the increase of the number of |
| At the same time, down payment values as well | | | | homeowners who were forced to default on |
| as flipping rates have remained fairly | | | | their mortgage loans. |
| constant, and buying activity by owners who | | | | |