The area’s median price, which reflects the midpoint of sale prices, hit $505,000 in mid-2007, DataQuick said.  A total of 19,926 new and resale homes and condominiums were sold and purchased last month in the 6-county region that is the most heavily populated area in the state of California.  The area, including such cities as Los Angeles, San Diego and Riverside, recorded 13,240 sales during December 2007.  The median price paid for homes sold in Southern California hit $278,000 in December, down from $425,000 in December 2007.  DataQuick said the drop in the median price “overstates the decline in home values” since more affordable homes in the foreclosure-hit inland markets accounted for a large portion of sales. The Southern California foreclosure sales accounted for 55.7 % of December’s re-sales, up from 24.3 % in December 2007.

California’s residential real estate market was one of the most expensive in the US during the years-long housing bubble. The state is now struggling with one of the country’s highest foreclosure rates after many buyers got in over their heads with debt Formerly sidelined buyers are rushing to snap up foreclosed homes, but many would-be buyers in expensive markets remain on the sidelines because financial institutions are reluctant to make so-called “jumbo mortgage loans required to pay for homes in California’s many high-price neighborhoods.  John Walsh, president of DataQuick said, “Mortgage interest rates last month were near record lows … It does look like the spigot is being opened a little bit, at least for reduced home purchases.”  Read the complete article. 

According to former Ditech executive Josh Emmons, “The increased consumer awareness of foreclosure prevention alternatives like loan modifications has reduced some of the short sale market-share.”  Still many real estate evaluators expect a bumpy road for 2009 with property values forecasted to decline in double digits across the state. California short sales continue to dominate the Southern California housing market. However many believe we will see a turn of the tide for the mortgage business. 

KMG President, Jason Cardiff remains optimistic of a possible rebound for the housing sector in 2009 because of the significant efforts from the mortgage powerhouses to lower interest rates and make credit more available for refinancing and new home financing.  In a recent Real Estate Related News article Jason Cardiff said, “2009 may see the housing sectors and home financing markets rebound after all.”  He continued, “The Federal Reserve showed their commitment with record low rate cuts to fight deflation and many financial insiders believe the President Elect, Barrack Obama will be aggressive in an effort to stem the foreclosure mess.”  Read the complete story > Jason Cardiff Remains Optimistic of 2009 Mortgage Rebound

In a recent article, Peter Y. Hong shows how the unemployment is rising and consumer spending is sputtering and of course this adds more to the foreclosure crisis equation because it becomes even more difficult to finance or refinance home loans.  Just last year, several market analysts interviewed by The LA Times predicted that Southern California home prices would drop 15% to 25% from their peak.  It took only until July for the median price to fall 25% below its 2007 peak of $505,000, and it has kept falling since. 

The California governor continues to promote home foreclosure prevention by encourages lenders to offer better financing with loan modifications that enable the homeowners to keep the homes.

Barring a dramatic economic reversal, the median sales price is on track to slip below $300,000 when November sales are calculated next month.  Thomas Davidoff, a UC Berkeley economist, said he and others underestimated the drop in value because it was tougher a year ago to know just how many people had mortgaged their homes for more than they could really afford.  Those earlier forecasts proved off because “it was hard for people to get their arms around just how bad mortgage lending standards had gotten,” Davidoff said.

During the real estate bubble, banks and mortgage brokers offered mortgage loans that required little or no money down, minimal proof of income and “teaser” mortgage rates that lowered initial monthly payments but later jumped to a much higher rate.  Last year, it was unclear how many of those loans would default. But much of that mystery has been solved by now, as massive numbers of homes have been repossessed.  In October 2007, 16% of the homes sold in Southern California had been foreclosed, compared with 51% last month. Mounting foreclosures flooded the real estate market with discounted repossessed properties, further decreasing home values.  The ripple effect from that put even more homeowners’ upside-down because in many cases their mortgage balances are greater than their home is actually worth.  The declining house values continue to lead to more foreclosures.  Now, “we’re probably seeing an over-correction” in the most depressed inland areas, Davidoff said. In communities overrun by foreclosures, “you couldn’t build a house for less than what [existing homes] are selling for,” he said.

Christopher Thornberg, principal of Los Angeles consulting firm Beacon Economics, is among those who predicted a 25% price decline last November, making him one of the more bearish forecasters at the time. By March, he was estimating a 40% decline. Now he predicts that prices will keep dropping throughout 2009, until they’ve fallen 55% from their peak.  Owners of higher-priced homes may put off selling during the early phases of a downturn, causing more expensive homes to decline in value at a slower rate. But eventually many high-end owners have to sell at prices well below peak levels, Thornberg said.  Last month’s Case-Shiller Home Price Index, which tracks home sales by price tiers, showed that Los Angeles-area homes priced in the bottom third of the market had fallen 42% from their peak prices by late last summer — but those in the top third had dropped 21%.

In Southern California, Orange County posted the smallest price decline, with October prices 27% below a year ago. San Bernardino County’s 39% decline in October from October 2007 was the largest price decline, MDA DataQuick reported.  Nationwide, the National Assn. of Realtors reported Tuesday that home sales prices fell in 80% of U.S. metropolitan areas in the third quarter. Foreclosures accounted for 35% to 40% of homes sold in the quarter.  The National Assn. of Home Builders also reported Tuesday that its index of builder confidence hit its lowest level since its 1985 creation. The index is based on a survey of builders’ views on sales conditions for new homes.