California short sales continued to increase at a rapid pace as many homeowners look to short sales as an alternative to a foreclosure.  Many of the California residents qualified for a loan modification from their lender, but since many believed their mortgage was higher than their property value was, they opted to sell their home.  Unfortunately many California homeowners have lost their nest egg when their home equity evaporated amidst the housing crisis and credit crunch.  Clearly mortgage refinancing is simply no longer an option for most borrowers. 

California home sales soared 254.9% in the Riverside/San Bernardino area in October, compared with the same period a year ago, while the median home price fell 39.7% to $209,990, according to figures released Tuesday.   According to the Los Angeles-based California Association of Realtors the Palm Springs/Lower Desert area, home sales jumped by 115% in October compared with the same month last year, and the median price fell 36.3% to $206,050.  

Statewide, home sales increased 117.1% in October compared with the same period a year ago, while the median price of an existing home fell 39.9% to $311,060, CAR reported.  “Statewide sales increased significantly in October to 552,750 homes on an annualized basis, the highest sales level since late 2005,” said CAR President James Liptak. “The record gain stemmed primarily from extremely large increases in regions with a high concentration of distressed sales.   “Most October sales likely opened escrow prior to the beginning of the ongoing freeze in the financial markets,” he said. “We won’t have a clear picture of the full impact of the fallout until November and December sales are reported.”

The California cities and neighborhoods with the highest median home prices during October:
Newport Beach, $1,150,000	Los Gatos, $810,000		Redondo Beach, $727,500
Danville $883,250	Cupertino, $804,500		San Ramon, $710,500
Mountain View, $860,000	Santa Monica, $744,500
Santa Barbara, $835,000	San Mateo, $740,000
The cities and communities with the greatest median home price increases in October compared with the same period a year ago were: =
Mountain View, 18.6 %		Ridgecrest 6.2 %
Alhambra 13.4 %		Berkeley, 5.9 %

Economists forecast new home sales would drop to a 441,000 annual pace, according to the median estimate in a Bloomberg survey of 68 economists. Forecasts ranged from 380,000 to 470,000. Commerce revised the September sales pace down to 457,000 from an initially estimated 464,000 rate.  “The new home market remains extremely weak,” said Steven Wood, president of Insight Economics in Danville, California. “A substantial inventory overhang still exists. This is pressuring home prices lower.”