California Feeling Effects of Housing Slump

California home sales dropped 31 percent in March from year-ago levels, the slowest March sales total since 1997, according to a new report from DataQuick.

A total of 39,800 new and resale houses and condos were sold statewide last month, down dramatically from 57,675 for March 2006.

In spite of the steep drop in sales volume, prices continued to climb. The median price paid for a home in California last month was $484,000, a new record; median prices were up 2.5 percent from February’s $472,000, and up 3.0 percent from $470,000 for March a year ago.

Southern California sending mixed signals
Southern California’s housing market continued to send contradicting messages in March, DataQuick said. Sales remained at a ten-year low while the median sales price increased to a new peak.

A total of 21,856 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month.

Last month’s sales were the lowest for any March since 1997 when 20,024 homes were sold. The slowest March in DataQuick’s statistics, which go back to 1988, was in 1993 when 16,214 homes were sold, while the strongest was in 2004 when 37,030 were sold.

“There are several things going on here. First, the drop-off in entry-level sales is part of a normal real estate cycle. That category surged at a later point in time, and is declining at a later point in time. We actually thought this would happen four or five months ago. Second, both lenders and buyers are being more cautious, the dicey mortgage financing has all but disappeared,” said Marshall Prentice, DataQuick president.

“Third, it’s becoming apparent that a lot of the 2004/2005 buying activity was drawing from the future, and that future is now. A lot of demand was pre-met, otherwise these low sales counts would have put more downward pressure on prices by now,” Prentice said.

The median price paid for a Southland home was $505,000 in March, DataQuick said, a new record and the first time it was above $500,000. The $505,000 was up 2.0 percent from $495,000 in February, and up 4.6 percent from $483,000 for March last year.

The uptick in median is also due to a stronger-than-anticipated market in Los Angeles County. The other Southland counties have flat or declining prices. Prices in San Diego County have been flat the past half year, about five percent below their peak when adjusted for seasonality and shifts in market mix.

For more information, visit http://www.dataquick.com.