Fire Sale: California home prices now 40% below year-ago levels

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The median sales price of California homes sold in July was 40.3% below year-ago levels as bargain-hunters snapped up distressed housing in large numbers, skewing the state’s housing market toward cheaper houses, the California Association of Realtors reports.

Median sales prices in the state -- which peaked at just under $600,000 late last summer -- fell from $587,560 in July 2007 to $350,760 in July 2008, a staggering decline that translates into prices falling by $4,500 per week.

‘Deeply-discounted, distressed sales continue to drive volume in many regions of the state,’ said William E. brown, president of the California Association of Realtors.

Median prices paid for single-family homes have now rolled back to levels not seen since early 2003, and the lower prices are luring buyers in large numbers: The C.A.R. reports the pace of home sales in July surged by 43% from year-earlier levels. Inventory of for-sale homes also dropped sharply, a sign the California housing market may be stabilizing. From C.A.R.’s press release: ‘C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in July 2008 was 6.7 months, compared with 10 months (revised) for the same period a year ago.’

Note: It’s important to remember that the 40.3% decline does not indicate that individual houses have, on average, lost 40% of their value. The decline comes from a combination of two factors: yes, houses are losing value; but also, the ‘mix’ of homes being sold has changed -- that is, houses in cheaper neighborhoods are selling faster, and in larger numbers, than more expensive homes, which skews the statistics toward lower median prices.

--Peter Viles
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