The Market Has Started To Reflect This

Category: Finance, Real Estate.

In April 47, 250 new and resale houses and condos were sold in the state of California. April of 2005 was one of the strongest months for real estate in California s history.

That s down from 54, 500 in March which is a drop of 13% . What a difference a year makes. Even though sales were down, prices were not. Sales were down 21% from last April. In April of 2006, prices were up 12% from the same period a year ago. Since California trends are so important to the Real Estate market, the Real Estate market there is being watched very closely. The average price of a home in California now is$ 562, 38Nearly 85% of the cities in California have shown an increase in prices since the same period last year.

One market that is watched closely is the luxury home market. So what is happening in the luxury market in California? The feeling is in a market downturn, the luxury market will be one of the first markets to suffer. Lets take a look at these markets in Los Angeles, and San Francisco, San Diego. In Los Angeles the average luxury home was priced at$ 29 million. In Los Angeles values rose 1 percent from the previous quarter and 14 percent from a year ago.

In San Diego prices rose 9 percent from the previous quarter and 8 percent from a year earlier. San Diego as a whole has been one of the most overheated markets in California, so the fact that luxury home prices continue to hold up there may be good news for the rest of the homeowners in San Diego for now. The average luxury home in San Diego priced at$ 1 million. In San Francisco prices were up 6 percent from the previous quarter and up 6 percent from the same period of time last year. So what direction is the California Market moving? The average price of a luxury home in San Francisco is$ 92 million. There are investors cashing in on their profits and getting out, however most homeowners are not investors.

The market has started to reflect this. Investors poured into lower priced markets during the recent boom and areas in Florida and Arizona have many residential investors. In Phoenix the real estate market is pulling back due to rising inventory from investors trying to cash in, however at this point you couldn t call this a bust. In California the market is returning to normal conditions. In other areas of the country prices are still inching up. It will take longer to sell a home and prices may stay flat or increase slowly.

Down payments remain stable and speculation buying is moderate. So far the signs of market stress that would indicate a bust are not there. The default rates are up, however these rates are still low.