The Housing Chronicles Blog: SoCal home prices stabilizing?

Wednesday, April 15, 2009

SoCal home prices stabilizing?

The latest numbers from MDA/Dataquick are out, and show that the median price for an existing home in Southern California remained stuck at $250,000. What makes this interesting is that this is the third month in a row that it's remained stable, although that's really due to the huge influence of foreclosures (mostly in the Inland Empire). So if one month does not make a trend, does three?

I discussed this subject for local station ABC7 on their 5:30pm newscast, and whereas prices for entry-level homes have already fallen by 40% to 50%, those for move-up and luxury homes have fallen by 30% to 40%, so I would expect to see further price declines throughout 2009 and into early 2010 for higher-priced homes. However, in terms of the level of overall median price declines, I think we're past the 7th inning stretch.

Also, from an L.A. Times story:

The median sale price for a Southern California home remained the same in March for the third consecutive month, indicating that the housing market may be stabilizing for at least starter housing.

The median price paid for a home in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego counties was $250,000, the same as it was in January and February, according to MDA/DataQuick information services in La Jolla.

The median sales price had not held steady for two straight months since it peaked in 2007, the firm's data shows. The March sales price median was down 35% from a year ago. The $250,000 median price is down 51% from the peak price of $505,000 in mid-2007.

Foreclosed homes accounted for 55% of homes sold during March...

But the robust sales activity has been concentrated on lower-priced homes, DataQuick said. The firm estimates homes in more costly neighborhoods have dropped in value by only half as much as homes in lower-priced areas.

Sales at the high end "are dormant right now," said DataQuick president John Walsh. The median sales price will rise if activity picks up in that segment. But mortgages of more than $417,000 -- even those that do not meet the definition of a jumbo loan in states like California -- remain more difficult to obtain, Walsh said. A jumbo loan is a mortgage that is too large to be backed by the federally chartered mortgage giants Fannie Mae and Freddie Mac.

For now, the median prices are "simply a reflection of what is selling -- mainly distressed properties in the more affordable neighborhoods," Walsh said.

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