California Housing Market Turns Corner
Nov. 25 (Bloomberg) -- California, one-time hub of subprime mortgage lending and the nation’s leader in home foreclosures, has turned the corner toward a housing recovery, according to the state Association of Realtors.
Single-family home prices in California rose for the eighth consecutive month in October. The median cost of an existing, detached house gained 0.3 percent from the previous month to $297,500. Prices dropped about 3.2 percent from a year earlier, compared with annual declines of 7.3 percent in September and 17 percent in August.
“California has hit and passed the bottom of this real estate cycle,” Leslie Appleton-Young, vice president and chief economist of the Los Angeles-based Realtors group, said in a statement today.
Sales of existing houses climbed 1 percent in October from a year earlier, the Realtors group said. The state is on pace to record 562,400 sales in 2009, based on the rate of transactions last month. Foreclosures represented 41 percent of sales, down from a peak of 59 percent in February, research company MDA DataQuick said on Nov. 19.
Home sales throughout the U.S. are being boosted by a drop in interest rates and a federal tax credit for homebuyers. Fixed 30-year mortgage rates dropped for a fourth consecutive week to 4.78 percent, matching a record low set in April, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.
The median single-family house price in California is 50 percent below the peak of $594,530 reached in May 2007, the state Realtors group said.
California Unemployment
California, the most-populous state, has one of the highest jobless rates in the country. The state’s unemployment rate is 12.5 percent, compared with the national rate of 10.2 percent, according to the U.S. Department of Labor.
Dangers still facing the state housing market include joblessness and the end of the federal tax credit next year, Appleton-Young said in an interview.
“There are a lot of minefields -- a lot of uncertainty going forward -- but we were looking at eight consecutive months of increases in the statewide median, and we are seeing multiple offers” on many homes for sale, she said. “It’s going to be a slow recovery.”
Obstacles also may include homeowners who want to sell their houses and are waiting for higher prices, and an unknown number of foreclosed properties that have yet to hit the market, said Andrew LePage, an analyst with MDA DataQuick, in a Nov. 17 interview.
‘Aren’t Normal Times’
“The market’s starting to tighten up a little bit,” LePage said. “In normal times, we would technically be in a seller’s market. Of course, these aren’t normal times.”
The median time it took a median to sell a California house fell to 34.1 days in October from 45.5 days a year earlier, the Realtors group said. The association’s index of unsold inventory dropped to a four-month supply from 6.1 months a year earlier. The index shows the time needed to deplete the supply of homes on the market at the current sales rate.
The median price for a California condominium was $267,520, down 3.6 percent from a year earlier and 1 percent from September, the Realtors group said. Condominium sales rose 9.4 percent from a year earlier and 5.5 percent from September.
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