RECORD Home Price Decline in CA-Again?
Southern California home prices continued to fall at a record pace in February, and are now at 2004 levels, a real estate information service reported today.
The median price for a Southland home last month was $408,000, down 17.6% from a year ago, according to DataQuick Information Systems. Area home prices have now fallen 19% on average from their peaks last year.
The steep price declines are putting many more homeowners "upside down" -- owing more on their homes than their homes are worth. Forecasters say foreclosures will likely continue to rise and prices will fall further.
About one-third of Southern California homes sold in February had been foreclosed since January 2007, according to DataQuick. A year earlier, previously foreclosed homes accounted for 3.5% of sales.
Since September, each month's sales totals have been the lowest for comparable months since 1988, DataQuick said.
As I have been trying to point out, rising inventory and slowing sales is forcing the price of homes down at a record pace. The price declines are getting WORSE, not better. Not only are prices crashing, sales are slow.
"Sales remained extraordinarily low, and a significant portion of what did sell was in areas beset by foreclosure activity. That's where sellers are the most motivated and price cuts are largest. Mainly it's in the inland markets, often in newer suburbs, where prices got pumped up artificially with the sort of crazy loans that no longer exist," said Marshall Prentice, DataQuick president.
In order to generate a sale, it is becoming increasingly necessary to drop the price dramatically. Foreclosures as a percentage of sales has increased 1000% over the past year in CA!!!!!! Many of those foreclosures are in areas where new home builders concentrated. And some of those builders are continuing to build specs only adding fuel to the fire.
If this madness doesn't stop, the prices are goint to continue to fall. As the prices continue to fall more homes will continue to get foreclosed. As more homes get foreclosed the prices will fall even further and round and round we go.
In the mean time, let's keep bonusing public builder executives for building and dumping specs on the market. For those builders that act responsibly, they should be rewarded.