NEW YORK (MainStreet) — It was only two years ago that California – along with Arizona and Florida – was the poster child for plummeting home prices. But a new study says that not only are more homes selling in the Golden State these days, but home values are actually climbing across the board. That would be great news for the rest of the country.
After a brief climb in June, home sales nationwide were again in decline in July, according to the National Association of Realtors. The NAR says that the housing sector saw gains in the Northeast and Midwest, but experienced declines in the South and West.
“Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” says Lawrence Yun, the N.A.R.'s chief economist. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”
California seems to have bucked the trend of lower home sales in the West, as the N.A.R. notes.
That’s the conclusion from the California Association of Realtors as well. The organization's August home sales report shows that sales of existing single-family homes in California were up from 457,930 homes in July to 497,390 in August – an 8.6% increase. The August numbers were also up 10.2% on a year-to-year basis.
The median price for a single-family home in the Golden State rose incrementally – up 1% in August from July. One sour note: The median price on a year-to-year basis was down 7.4% from August 2010.
The numbers suggest what economists have been hoping for three years now – that the California housing market has finally hit bottom, and is just now starting an upward climb. “August’s median price marked the highest since December 2010, signifying that prices may be stabilizing in some market segments, as investors and first-time buyers continue to see value and opportunity in the market,” notes C.A.R. President Beth L. Peerce.
But nothing’s etched in stone yet. The C.R.A. notes that a good chunk of those sales came before the stock market tanked in early August and the tug-of-war between Washington politicians over the alarming U.S. debt picture. Regulations that would decrease the mortgage loan limits backed by Fannie Mae (Stock Quote: FNM) and Freddie Mac (Stock Quote: FRE) are also coming on Oct. 1, 2011.
“While the increase in August sales is encouraging, these sales are based on closings that occurred before the debt ceiling debate in early August and subsequent heightened concern about the future direction of the economy,” says C.A.R. vice president and chief economist Leslie Appleton-Young. “How these events and the impending reduction in the conforming loan limits will impact home sales and prices in the coming months remains to be seen.”
But at least the tide seems to be turning in California. And you know what they say about trends in the U.S. – they start out West and work their way through the rest of the country.
Homeowners – and economists – can only hope that old maxim works out again.
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