As a progressive state, California has always been considered a leader of the pack in regards to politics, fashion and culinary delights. Unfortunately the region also became known as the trendsetter in regards the real estate market boon and bust cycles that wreaked havoc on the industry from coast to coast. Because of that unfortunate notoriety, experts are closely monitoring the local real estate market to gauge the future of the industry. The most recent news from the Golden State has some highs and lows, there are signs that the real estate market is stabilizing in the region.
California Home Values Rebounding
In California, reports indicated that home prices have increased over the past nine months. According to CNNMoney.com, nearly all areas in the region have shown gains in home values over the time period. Statistics from July 2010 showed an average 10.4 percent home value gain over the same time period as last year. The upward movement in the home price sector seems to indicate that within the state, the official bottom of the housing market has occurred and recovery could be looming on the horizon. Some of the biggest gains in the region include:
- San Francisco: Home prices gained 14.3 percent in value making the median home price over $607,000
- San Diego: Home prices gained 11.2 percent in value making the median home price $389,000
- Los Angeles: Home prices gained 9.2 in value making the median home price $345,000
The increase in home prices is being accredited to several factors, including the sale of properties originally funded by toxic, subprime mortgages. When the bubble burst, many Californians lost their homes to foreclosure. Those properties then became real estate owned and the lenders highly discounted the properties to sell them and free themselves of the debt obligations. That move forced private sellers to slash their property's listing prices to stay competitive in the market.
For the past few years, California has had amazing real estate deals on a large selection of single-family detached homes including celebrity property and architectural gems. Thanks to both federal and local stimulus incentives to local homebuyers and historically low mortgage rates, those discount properties were scooped up and greatly reduced the over-supply of the properties. That movement has tipped the supply and demand scale in the favor of positive market conditions.
California Foreclosure Rates Increased
Although the rise in home values is encourage, California has still not entered a recovery cycle. Data provider ForeclosureRadar, recently released information stating that notice of default filings in-state rose for the fourth-straight month to a level of 16.6 percent. The information concluded with August 2010, and although it may seem like a sharp increase, the firm reports that overall, foreclosures have decreased by 16.3 percent over the same time period last year.
Future of California's Housing Market
Although experts have predicted a full housing recovery may take years, it will indeed eventually happen. Unemployment is currently one of the biggest factors preventing recovery from taking full force in state. Although the most recent indicators from July 2010 have shown a small decrease in the number to 12.3 percent in state (down from 12.5 percent in February 2010), until the numbers greatly reduce, further growth in the housing market will be limited.
