The once red-hot California housing marketing has officially turned. The California Association of Realtors reports that sales fell 40% in October while the median home price dipped below $500,000 for the first time in years.
Though sales had been slowing, California’s median home price held up due to still strong sales at the high end in places such as Los Angeles and Silicon Valley. Now sales at the upper end of the market declined as “even well-qualified borrowers had difficulty securing financing,” the Realtors said.
The median price of an existing, single-family detached home in the Golden State fell nearly 10% in October to $497,110. The median price in L.A. fell 8.6%; in Santa Cruz County, prices dropped 2.5%. One exception, San Francisco, which still saw average prices climb.
The affordability of a home had fallen to record lows in recent years as the price of property doubled in Cali. The state Realtors had been hoping the Office of Federal Housing Enterprise Oversight would raise the amount which qualifies a loan as “conforming.” That makes the loans cheaper and easier to finance. Instead, the cut off for a jumbo loan remains at $417,000 for 2008, unchanged since 2006. So even the median home buyer in California must take out a higher priced jumbo loan, until that is, prices fall further.
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.