Monday, October 18, 2010

California Housing Inching Toward a Comeback?

Nationally, the housing market is in a hesitant mode. But there is an inkling of constancy starting to surface.

Property values are rising in several areas of the state. The last nine months have experienced increases of 10.4% year-over-year as of July, putting the state's median price at $315,000 – almost two times the median of $183,000 nationally.

Coastal cities are showing even better gains.

The largest gain of any U.S. city in the past year was in San Francisco, rising
14.3%. The median price there is currently over $607,000. San Diego has seen an increase of 11.2% (median price: $389,000) and L. A. had a 9.2% leap (median price: $345,000). Florida, Arizona and Nevada remain in a struggle.

Locally in Ventura County real estate, the current median price for residential sales is up to $385,000 for the last twelve months over the previous twelve month median of $365,000.

Leslie Appleton-Young, California Association of Realtors' chief economist, feels our strength is related to the speed at which prices “went down so far and so quick”. “That left a lot of people here saying, 'Wow, affordable California housing.'"

The deluge of foreclosures accompanying the mortgage meltdown stalled a rapid home price recovery. Real estate in California had out-priced itself so much that many buyers were willing to over extend themselves with exotic loan programs for fear of not ever getting into a home.

While we’re all waiting to see how the foreclosure moratorium (or absence thereof) will affect the market, California is still one of the world’s 10 biggest economies, bolstered by tourism, aerospace, finance, agriculture, software and more. The recovery of these industries will drive the demand for housing.

Plus, the California economy is picking up, albeit slowly. Even in a recession, it has remained one of the world's 10 largest economies, mainly because it is driven by every major industry -- aerospace, tech, software, finance, agriculture, tourism. So as more of those industries recover and employment picks up, demand for housing will jump.

California is seen as a trend setter so any glimmers of hope are potentially a catalyst for better times across the coast. For home sellers in other states, what's happening in California is encouraging. Trends often begin on the coast, so they're hoping the recovery will roll eastward.