This just in, about February sales, from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
The statewide median price of an existing, single-family detached home sold in California was $271,320, down 2.8 percent from a revised $279,140 in January and was down 2.5 percent from the $278,190 median price recorded for February 2010. The February 2011 median price was the lowest since May 2009, when it was $263,440.
Why are prices declining?
Perhaps the shadow inventory is being released. It is widely believed that most buyers will be looking to move in the summer which means the best time to list a property would be April, May or June. Expect more of this slow decline for the next 3-4 months. After that, it's a crap shoot, If the California unemployment rate stays north of 12%, this might be a tepid summer for real estate. Until Jerry Brown's tax hike is defeated, expect the unemployment rate to remain over 12%.
Here are other highlights of C.A.R.’s resale housing report for February 2011:
- The Unsold Inventory Index for existing, single-family detached homes was 7.3 months in February, up from 6.7 months in January 2011. The index was 6.0 months in February 2010. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
- Thirty-year fixed-mortgage interest rates averaged 4.95 percent during February 2011, compared with 4.99 percent in February 2010, according to Freddie Mac. Adjustable-mortgage interest rates averaged 3.35 percent in February 2011, compared with 4.23 percent in February 2010.
- The median number of days it took to sell a single-family home was 64.4 days in February 2011, compared with 39.2 days for the same period a year ago.
So mortgage rates are similar to what they were a year ago but inventory is rising and staying on the market longer? How can that be? Perhaps the first-time home buyer tax credit was really just another failed stimulus plan, stalling a meaningful recovery. The result is a bunch of wasted money; $600 stolen from nine neighbors so that one neighbor could sell his home at a higher price.
This is a perfect illustration of the broken window fallacy. We still have a lot of broken windows in California. My California real estate weather prediction? Cloudy with a chance of rain.