We keep hearing about dropping house prices, and of course we know it is true. But the fact is that prices in California have dropped so much that you should consider grabbing up a bargain for yourself.
Recent reports have shown continuing increases in foreclosed houses and several western states are among the top ten states for foreclosure filing. These include Nevada, Arizona and California, with southern California showing an overall majority in that state.
It is unfortunate for the rest of the housing community that you do not need to go into foreclosure to have the value of your property decreased. In fact, as the Governor of California said, "...foreclosures don't just hurt homeowners, they have an effect on all Californians through the economy and our state budget."
California has been affected more than any other state by the sub-prime mortgage crisis. When easy credit became available many people took a chance on following their Californian dream and large numbers of homes changed hands at the height of the real estate bubble.
The bubble ended about a year ago, when prices peaked. At that time, the median price paid for a house was $484,000. According to an online data company that has been tracking local conditions, the same house would have declined to $402,000 by the end of 2007 and is still going down.
Their latest figures show that the median price for a home in January 2008 was $383,000; this same home would have been sold for $462,000 in January 2007.
Equity losses have varied according to specific areas, but a 20% loss on a house price in the last year is not an outrageous figure and in some areas it is worse. Sales have reached record lows for the state, which is hardly surprising, given the realty climate. Who would willingly put their home on the market, knowing that the sale of it will represent a loss?
Almost across the board in California from Los Angeles, Orange, San Diego etc., the number of houses sold in February 2008 is roughly half the number that were sold in February 2007.
Houses are still for sale though; some people simply have to move and other people who have had their homes a long time will not record a loss. This is because whilst home prices have dropped, they have not gone lower than the 2003/2004 price ranges - as yet. Many people bought before then and therefore they still have equity profits in their homes.
Larger homes are now more difficult to buy, because the financing of so-called 'jumbo' mortgages has become more expensive and more elusive. Bargains to be had are more concentrated in the inland markets and in the newer suburbs.
A condo may represent a good investment at this time, as many people will also be looking to rent if they have just come through a terrible foreclosure ordeal. With a renter paying down your condo mortgage, you would be able to stay put in your own home.
If you have always dreamed of California, then maybe you can one of the lucky ones who will now be able to afford a home in this sought after state.
