(06/25/2010) California's home prices are literally skyrocketing again, soaring in some of the Golden States' largest metro areas by 30 percent to more than 50 percent in little more than a year.
The price surge may be an indication of California's readiness to take the lead again in the nation's housing recovery -- if it can only get its sales engine going.
Fence-sitters and those looking to go West and put down stakes?
Take note.
California's home prices have been known to take off like wildfires, burning buyers who waited for the bottom only to find it long gone and themselves priced out of the market -- again.
California led the nation as one of the states hardest hit by foreclosures and did not fully hit bottom until February last year, according to the California Association of Realtors (CAR).
However, since that home price trough in February 2009, single-family, detached home prices have risen a whopping 32.3 percent from $245,230 to $324,430, as of May 10, according to CAR.
The numbers are miles ahead of CAR's own predictions, which called for prices in the both resilient and volatile housing market to rise only to about $280,000 for all of 2010.
"Home sales posted their third largest increase on record for May, due in part to first-time home buyers who timed the open and close of escrow in order to capitalize on both the federal and state tax credits," said CAR President Steve Goddard.
"May also marked the fifth month of double-digit gains in the median price, indicative of strong buyer demand relative to the supply of homes for sale. With a 4.6-month supply of homes for sale, unsold inventory continues to be well below the long-run average of seven months, and will continue to drive price appreciation over the next several months," said Goddard, broker and manager at RE/MAX Beach Cities Realty in Manhattan Beach, CA.
Since the same February 2009 bottom, home prices in the bay resort area of Monterey were up 50.8 percent. San Francisco Bay Area saw its median prices rise 48.6 percent. In Santa Clara County, ground zero for the Silicon Valley tech Mecca, home prices are up 41.6 percent.
"Last year, with interest rates low and federal home buyer tax incentives in place, first-time homebuyers and investors were attracted to the market. The increase in demand for these homes, led to multiple offers and price increases," said Jeff Bell, president of the Silicon Valley Association of Realtors.
Bell, a real estate agent with Coldwell Banker in Cupertino, CA, added, "Today, there are fewer foreclosure resales. With tax credits still in place (for Californians) and low mortgage rates, we are seeing a shift to more sales in the mid- to high-end market, which, in turn, has pushed the median price up in many areas, including Silicon Valley."
Even especially hard hit Sacramento, the state's capital city, is seeing a come back with home prices rising 14.4 percent since its April 2009 price trough.
Elsewhere, from trough-to-now, home prices were up 24.3 percent in the Riverside/San Bernardino region; 23 percent in the Palm Springs area; 22.5 percent, Ventura; 19.8 percent in San Diego, 19.5 percent in Orange County; and 17.4 percent in Los Angeles.
Unfortunately, for the year, from May to May, sales remained sluggish, rising only 1.2 percent, due to the same high unemployment numbers (12 percent in California) and tight credit conditions that plague the rest of the nation.
"Until the smoke clears from the home buyer tax credits after the end of June, it will be difficult to measure the level of sales activity which has been brought forward due almost entirely to the presence of the tax credit," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
Home prices still have a long way to go before (or if) they return to truly golden levels achieved during the peak market.
CAR says the market peaked in May of 2007 with a median price on single-family detached homes at a record $594,530. Today's statewide median, $324,430, remains 45.4 percent off the record high.
Santa Clara County, with a median price of $630,000, is only 27.5 percent of its peak price of $868,410. San Francisco's $592,930 median is 30.6 percent less than it's peak $853,910 price. Orange County's peak of $747,260 has fallen to $505,750, down 32.3 percent.
From peak prices to current prices, San Diego's home prices are down 37.1 percent; Los Angeles, down 42.8 percent; Sacramento, 51.5 percent; Riverside/San Bernardino, 53 percent; Palm Springs, 53 percent and Monterey down 54.4 percent.
"Nationwide, with $330 billion of mortgages in some stage of the foreclosure process and some 11 million homes currently underwater, it could be some time before the real underpinnings of housing demand recover in a meaningful way as supply will continue to outpace it," said Osborne.
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