California is the most populated state in America, and it contains eight out of ten of the most populated cities. But compared to the rest of the nation, hardly any Californian homes were bought or sold last month. Why was this, and what does it mean?

It may herald the end of the 27 month slide in the Californian real estate market, which means investors will be planning to buy up the property market. House prices have returned to 2005 levels and this year saw a large increase in foreclosures for California. With prices dropping so low, most people opted to stay where they were and not list their home for sale.

One year ago, over 70% of homeowners in default were able to make good their problem. It was solved by either refinancing, selling up or bringing their payments up to date. This year only 42% managed the same feat.

Investors in real estate are watching Californian property prices and some are beginning to pounce. Sales are down 33% - which increases inventory. Prices are down 16.5 % and the mortgage rate is down a full point since December. In some parts of California sales are down over 40% from last year, and have hit a 20 year low.

The prices have dropped considerably and one real estate tracking firm has concluded that prices are now low enough that investors are moving into California. They are basing this on the fact that non-occupying sales are creeping up, which indicates that some investors are already moving in 'for the kill'.

Realty experts now believe that if foreclosures slow down in California, the market prices will quickly improve. California is one of the high-cost states that will most benefit from the raising of conventional mortgage limits. The figure has just jumped over $200,000 from $417,000 to $625,000.

This may halt the further drops in the Californian realty market, forecast by PMI (Private Mortgage Insurers) last month. Once the prices of homes level out, existing Californian home owners will still be in a good position. The drop in prices in California is only balancing the large 'jump' in prices that preceded it in 2006.

In the last ten years house prices have almost doubled. Most home owners have already built up equity in their homes. The ones that haven't, know that if they weather out this storm, the realty climate will warm up and homeowners will soon be basking in that lucrative sunshine again.

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