Rebounding California housing market may be leading indicator for nation

by Broderick Perkins
DeadlineNews.Com

12/23/09 - California's housing market is often a bellwether for the nation and if the Golden State's housing market trends continue, conditions could bode well for the rest of the nation.

Both home prices and home sales are on the upswing in California, previously one of the hardest hit states in the nation during the recession.

The California Association of Realtors (CAR) reported this week, the state's median home price rose to $304,520, a 5.8 percent increase from the $287,880 median for November 2008.

A smaller supply is helping push up prices. CAR's Unsold Inventory Index fell to 4.5 months in November, compared with 7.1 months in November 2008, according to the association.

"The median price for most regions hit bottom during the first half of the year, and the statewide median home price now is nearly $60,000 higher than its lowest point in the current cycle," said CAR President Steve Goddard.

"First-time buyers continued to drive the market in November, as many opened escrow to take advantage of the federal tax credit prior to its original Nov. 30 expiration," said Goddard, who expects further price boosts due to sales generated by the extension of the first-time home buyer tax credit and an expansion of the credit to include qualified move-up buyers.

Meanwhile sales statewide were up 4.7 percent from a year ago.

"With sales bottoming out more than two years ago, and the median home price reaching its trough in February 2009, California remains ahead of the nation in market recovery," said CAR's Vice President and Chief Economist Leslie-Appleton-Young.

The condo segment is, by far, both the price and sales leader, with prices are up 12.1 percent from a year ago and sales jumping by a whopping 26.3 percent, according to CAR.

Statewide, the cities with the greatest median home price increases in November 2009 compared with the same period a year ago were: Cupertino, 37.8 percent; Poway, 35.8 percent; Morgan Hill, 33.2 percent; Lake Forest, 25.6 percent; Atwater, 24.4 percent; San Rafael, 23.8 percent; Atascadero, 22 percent; Vista, 21.2 percent; Tulare, 19.8 percent; Fountain Valley, 18 percent.

Year-to-year regional sales leaders were Santa Barbara South Coast, up 115 percent; Santa Cruz County, up 50 percent; Santa Clara County (Silicon Valley), up by 45.5 percent; San Luis Obispo, 40 percent and Orange County, where sales were up 28 percent from last year.

Prices and sales appear well on their way in the Golden State to live up to CAR's projections for 2010.

In October, CAR said California's median single family home price in California will rise 3.3 percent to $280,000 in 2010, up from the projected median of $271,000 this year.

Sales for 2010 were expected to decline 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

During the current boom-bust cycle, California's median price for single family homes peaked in 2007 at $560,300 and sales rose to 625,000 units in 2005.

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