Freefall: California median home prices down 35% in May

California's housing market continued its historic decline in May, as a flood of foreclosed homes for sale drove down the median price paid for a single-family home by a stunning 35% from year-earlier levels, the California Assn. of Realtors reported today.

The median price paid for a single-family home in the state dropped by almost $210,000, from $594,530 in May 2007 to $384,840 in May 2008, the association reported. That drop represents a decline of $3,800 per week, or $549 per day, and is the highest ever measured by the association. The price decline appeared to be accelerating from April to May, as median prices dropped by 4.7% in that period.

“The statewide median price declined 35.3% to $384,840 in May, a record for year-to-year percentage decreases in the median, reflecting the effect of large numbers of short sales and foreclosures in the market,” said association Vice President and Chief Economist Leslie Appleton-Young. “With the statewide median in the $585,000- to $595,000-range through August of last year, we expect the market to continue to experience large year-to-year adjustments through the summer, even if the median price holds steady over the next few months.”

There was a glimmer of hope in the report: the number of homes sold in the state rose 18% from year-ago levels, marking the second straight month of year-over-year gains after 30 straight months of decline. The Realtors' group attributed the pickup in sales to a flood of cheaper houses -- many previously foreclosed on -- that has dramatically changed the state's real estate market.  Additionaly, inventory of for-sale homes has decreased when expressed in terms of how long it would take to sell off all the inventory: "C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2008 was 8.4 months, compared with 10.7 months (revised) for the same period a year ago," the association reported.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo credit: Getty Images

Comments

[Tbone]

I haven't posted in quite a while but figured this was as good a time as any. First, an admission...those of you who called me out as a "troll"(not exactly sure what that meant but the context was clear) or as a perma-bull on the market; well...you were right, sort of. I was, in fact a very nervous home seller. I took a job in Canada in May of last year and put my home on the market just as the market began to stall. Zillow had it at $825K but I listed for $799K. As the months ticked by with no offers and small price reductions I got steadily more and more nervous. It was very difficult paying the astronomically high rents in Vancouver while maintaining my house in the SFV. My mortgage was pretty low because I bought in '99 when prices were still normal. I actually thought I overpaid in '99 at $226K, who knew? Anyway, by December I was in a slight panic at seeing the market continuing to slide. I posted on this blog occasionally trumpeting a bullish opinion, but truth be told not MY opinion. I actually was in total agreement with all the "sky is falling" prognosticators. The posts I made were a lame attempt at trying to stall the overwhelming psychology of the markets direction. Of course, one blog posting fake perma-bull isn't really going to accomplish a damn thing, but I was there watching my paper equity disappear and did whatever I could. If I had sold just 4 months earlier, I would have been a real estate genius. But selling was what I had to do. My real estate agent never pushed price reductions as much as I personally wanted to. I never felt that my home was actually worth $799K but the comps at the time actually pointed to that being a good price. Finally in Feb '08 I told her to drop it to $625 right as the junior jumbos were coming online. I figured a big price drop timed right at that moment was my best shot at selling before the market totally collapsed. I was right. There were some folks circling my house for months but couldn't qualify under the tighter standards. I made sure my price was agressively lower in terms of $/sf with the others in my area. A couple buyers suddenly emerged and I sold to one of them for $600K and I feel very lucky to have done so. The house was an early 1900's style craftsman in Van Nuys, just over 2000sf on a 10,000 sf lot. The exterior was mostly restored and the interior in fair condition, no major problems. Still, one thing I'm certain of....the house shouldn't cost more than $300K period. One thing I argued with folks here on this blog about that I DID believe however is about Van Nuys. Yes, the schools do stink. But the disparaging comments about gangs and crime in Van Nuys are WAY overblown. I lived peacefully there for almost ten years and I can say the neighborhood had very minimal problems. My neighbors were all wonderful people, and I would encourage anyone to live there.

I think the market will continue declining back to 2000 levels. Sellers would be wise to drop their price well below current comps if they want to get out at all. I don't think there will be another boom cycle like this last one in 20 years. Interestingly enough, Vancouver where I'm living currently, is at the zenith of an even larger boom than the one I witnessed in LA. Its funny because everyone here thinks that this market is different and that there won't be a market slide like in the States. People here are still paying $600K and up for 400sf condos on assignment. Crazy! Anyways, you bears all were right.

[Registered Investment Adviser]

Amazing! How could that have happened in one year time.

[Laker]

Tbone, Thank you very much for your great honesty!
Your story could hopefully help many sellers that are in denial. Many that could get a lot more today, than tomorrow. Chasing down the market is for losers.
I hope the best for you and your family. Using your experience and wisdom, you now see the craziness in Canada too, that will help you to maybe come back to US in couple of years and indeed buy a house for 2000-2001 price.
Thanks again for your insight and honesty.

[Cal]

Err, Tbone, by your description 14205 Hamlin was you? If so, I went to its open house once (my wife loves craftsman), I think you we very lucky to get what you got and it was only because the house was extremely unique (if in an incredibly bad area).

[Uncle Billy Beer, Eh]

Tbone! That was the most honest post I've seen on a blog since I visited www.dailyconfession.com

Renewed faith in humanity, etc.

(wasn't Tbone a nickname applied to George Costanza by his real estate co-workers? Totally forgot about that -- George worked as a real estate agent.)

Pete, great to see you back. Check out Diana Olick's post on cnbc. I think she found one of those large "vultures" that will continue to buy up swaths of real estate.

[Traynor]

The stated inventory levels are misleading, if not downright deceitful. Banks are have been taking back properties and stocking them up in the backroom at numbers that dwarfed sales for over a year now. Even with the "worst" of the subprime contagion over, the problems are now spilling over to Alt-A and regular prime loans as more and more people are finding themselves upside down in the Titanic. The cans of corn and peas on the outside store shelves isn't the whole picture. There's a packed stockroom in back with truckloads delivering more each day..

[the problemwithcaring]

Fascinating and scary stuff, T-bone. Thanks for sharing and glad everything turned out ok.

[Jimbo]

Cheri Ratino: I want to have your baby!

[It All Happens on the Margin]

It takes one TBone in every neighborhood that is realistic about what it takes to move a house to set the comps.