While nobody is yet predicting the end of the California housing crisis, there are increasing signs that prices have stabilized and transactions have increased, which could signal the end of the three-year-long collapse of this vital economic sector.
California home prices rose in the second quarter for the first time in three years while logging a second-straight monthly increase in June, according to the S&P Case-Shiller home-price indexes.
For June, a California index (based on a composite of San Diego, Los Angeles and San Francisco measures from the S&P Case-Shiller U.S. National Home Price Index) posted an 18% drop from a year earlier, a marked improvement over the dismal year-over year trends for the past year, which ranged from 21% to 28% record drops. For the month, the composite California home price index was up by two percent.
While nobody has called the end of the nationwide housing price collapse, the chairman of S&P’s index committee, David M. Blitzer, said he sees “hints of an upward turn from a bottom.”
At the end of the second quarter, average California home prices are down 42% from their peak in the second quarter of 2006.
This news on home prices in California came the same day that the California Association of Realtors announced that existing, single-family home sales increased 12 percent in July to a seasonally adjusted rate of 553,910 on an annualized basis.
According to CAR chief economist Leslie Appleton-Young, “Favorable home prices in the low end of the market continue to propel sales of homes priced less than $500,000. This price segment now accounts for 74 percent of the market share compared with just 43 percent prior to the start of the credit crunch. The high-end segment continues to experience elevated inventories and declines in the median price as financing for jumbo loans and unrealistic sellers challenge the market.”
Indicators of market distress continue to move in different directions, according to MDA Dataquick. The real estate monitoring and information company confirms that sales and median prices are on the upswing. But the company also reported this week that foreclosure activity remains near record levels, while financing with adjustable-rate mortgages is near the all-time low but has recently edged higher. Financing with multiple mortgages is low, down payment sizes and flipping rates are stable, and non-owner occupied buying is above-average in some markets.