Finally, some good news is coming out of the California Housing Market. The California Association of 
REALTORS ® (C.A.R.) reported positive trends in single-family home sales and the ‘experts’ start screaming rebound or turn around, the worst is over! Since I’m typically a fairly positive person and would love it if the market had actually turned, I’m trying to figure out why I’m not jumping up and down and calling all my customers to tell them the great news…
The Reality is…
In January 2009, C.A.R reported an increase in sales of 100.8% for existing, single-family homes sales in January 2009 compared to January 2008 while the unsold inventory decreased to 6.7 months from 16.6 months a year ago. In addition, the average days a house was on the market declined from 70.8 days to 49.9 days. This is the first time since October 2005 that the California Housing Market has seen existing home sales of over 600,000 homes and a 14% increase over the previous month.
With the possibility of positive cash flow properties and volatile stock market, many investors are also starting to buy again in California.
These are all good signs right? Right! Yes!!
Light at the End of the Tunnel or Illusion?
While most of the indices for a turnaround seem to be trending positive, there are a few that are concernin and not being talked about. For example, in the California Housing Market, home prices were down 40.5. The median house price was down to $254,350 over last year and 9.5% over December’s median price of $281,180 median price. That doesn’t bode well for the people who bought at the top of the market – even the ones that are still paying their monthly mortgage payments. The Center for Economic and Policy Research in Washington estimated that 30% of homeowners between 45 and 54 years of age, owe more on their mortgages than their homes are currently worth. How much longer are they going to continue to pay their mortgages when they owe way more than the home is worth?
And what about the unemployement rate? Last I heard, that was still going up. What happens as more people lose their jobs? Won’t that negatively affect the housing market?
Most analysts predict that the California Housing Market will continue to see price declines throughout 2009 and probably into 2010. The hope is that the decline will not be as steep as it has been over the previous year and will eventually taper off, signifying an end to the price drop and the beginning of stabilization and eventually increase. I think I agree. Prices aren’t dropping as quickly - that is good. They are still dropping - that is not so good (unless of course you are an investor or in the market for a new home).
The one major wildcard that deserves close scrutiny and analysis for the California Housing Market is still the homes going into foreclosure (sorry, I just had to bring that word up again). Due to the Federal Mortgage Loan Modification Plan, many banks have been trying to work with distressed homeowners to keep them in their homes. A lot of these properties will not qualify and will eventually end up in being foreclosed.
Conclusion
Although not everyone agrees that the California Housing Market is rebounding, most analysts and people that watch the California Housing Market agree that the worst seems to be over. If the banks decide to dump a huge number of deeply discounted foreclosed houses on the market all at one time, we will see much lower prices than we do now.
I personally do not think the worst is over. I think we have one more big wave of foreclosures that are going to hit in the next 12 to 18 months. When that happens, get your check book out!
The Central Coast has stayed fairly strong with minimal foreclosures compared to some of the other counties in California. Morro Bay, Cayucos, and Los Osos have held their prices remarkedly well. Santa Maria on the other hand has had more than it’s fair share. With that said, there are great deals in all of these communities. What about a bay front lot for under $200,000?
