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The housing slowdown that’s already begun in other parts of the country is catching up to the Golden State. Home sales in Southern California fell 16% in April, their steepest decline since 1995, according real estate market researcher DataQuick. Prices, meanwhile, while still up 9% year-over-year, fell .2% from March to an average of $485,000. “March and April have shown us that the boom phase of this cycle is behind us,” said DataQuick president Marshall Prentice. “Now it’s just a question of how the cycle ends. Right now it looks like changes in the real estate market are happening gradually. But there’s a lot of uncertainty among analysts regarding the effect of higher interest rates and how fast the economy is generating demand in regional markets.”
The DataQuick data illustrates the delicate psychology in place in housing markets. “Right now sellers are sticking to their price,” Los Angeles Realtor Brock Harris says. “We’re seeing a lot of over-optimistic sellers and increasingly cautious buyers. That’s keeping a lot of inventory on the market.” How might that change? “At some point someone’s going to drop their price. People will see that as the new comp and it’ll be a domino effect.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.