California Home Sales Slowest in Two Decades; Prices Keep Falling
Housing markets in both southern and northern California reached 20-year lows in January as sales fell to new lows amid a crisis that, for now, seems to have no end in sight. Southern California home sales dipped below 10,000 transactions for the first time in more than 20 years, while Bay Area home sales plunged below 4,000 transactions for the first time in over two decades, real estate information service DataQuick Information Systems reported earlier this week. A total of 9,983 new and resale houses and condos were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in January, down 24.6 percent versus December's sales totals. The story was similar in northern California, with sales off 29.2 percent on a monthly basis to 3,585 homes sold. Both totals represented the lowest on record; DataQuick's statistics go back to 1998. Prices fell as well, with the Southland registering a 14.4 percent annual drop in prices, and the Bay Area registering 17.3 annual drop in price -- continuing a strong downward trend in prices throughout the state. "We don't know how much of this downturn is driven by market fundamentals, and how much is due to turmoil in the lending industry. The market has been sending mixed signals since August, and it's virtually impossible to see trends and make predictions. Our sense is that quite a bit of activity is on hold, we just don't know how long it can be kept on hold," said Marshall Prentice, DataQuick president. Prentice suggested that a boost to the conforming loan rate, made official this past week, may help turn the tide around. "What's clear to us," Prentice said, "is the credit crunch that struck in August had a sharp and immediate impact on Bay Area sales and median prices. The 'jumbo' loans the Bay Area relies on so dearly got pricier and harder to get, and their use has plummeted. The statistical picture could change quickly, though, if the government's effort to raise the conforming loan limit reignites $500,000-plus home sales. "We could see significant gains in both our transaction totals and median prices." For more information, visit http://www.dataquick.com.