California Real Estate Drop

Staff Writter, Jan 19, 2009

Just when you thought it couldn’t get any worse, the news comes out with the ten worse real estate markets.  Out of those 10 worst markets, 8 were in California with Los Angles holding on to number 1.  In 2009 the median price of a home in California is expected to drop another 25%.  That is not good news for either Real Estate or the economy in California and they have had enough problems already.

Among those listed in the10 worst markets are cities that have already been hard hit.  Foreclosures are already rampant in Stockton and Riverside California.  Sacramento, Anaheim, Fresno, San Diego and Bakersfield also made the not so prestigious list.  Miami Florida and Washington DC rounded out the ten, and are expected to see a 20% drop in home prices in 2009.  In November of 2008, home sales increased 83.2% but the median price dropped 41.8%.  The median price of an existing, single-family detached home in California during November 2008 was $285,680, a 41.8 percent decrease from the revised $490,511 median for November 2007, C.A.R. (California Association of Realtors) reported.

Across the state of California, the 10 cities with the highest median home prices during November 2008 were: (from highest to lowest) Santa Barbara at $875,000; San Ramon at 790,000; Danville at $789,000; Arcadia at $692,500; Berkeley at $690,000; San Mateo at $670,000; Redondo Beach at $667,500; San Francisco at $648,000; Alameda at $635,500; and Irvine at $635,000.

Tax incentives have been proposed in hopes that it will increase the numbers for the Real Estate Market.  More precisely, homebuilders want a tax credit given for buying a new home.  They cite statistics of tax incentives given in the 1970’s that drastically increased the housing market.  There is also a lot of hope riding on what Mr. Obama will be able to do in terms of stimulating the economy as a whole.  

Building permits in California were down 43% in 2008 and it is feared that California cannot afford to continue in this down slide in the housing market.  Generally, if the housing market takes a turn for the better, so does the economy.  Not dollar for dollar of course, but in general.  

The coming months should bring a lot of answers from the State level and the National level as to how to handle the Real Estate crisis in California.  Either way, it could have an impact on not just California, but the Nation.