Home Prices in California Drop Twenty Six Percent

Posted on April 25th, 2008 by saman

The enormous number of foreclosed homes assisted the twenty six percent plunge in the prices of homes in California last month. Experts believe that this will continue as low interest rates begin to expire for those who bought homes at the beginning of the housing boom. Over thirty-eight percent of homes in California that were sold last month had been foreclosed on at some point last year. There is no data immediately available on the years prior to 2007. However, an analyst stated that the percentage of foreclosed homes for sale is believed to be at an all-time high for the state of California. The median price for homes in California was over three hundred thousand dollars last month. This is a drop from the price of four hundred thousand dollars when the market was at its peak. The amount of resale and new homes and condominiums dropped about thirty eight percent from the previous year. In March of last year loans that were over four hundred thousand dollars accounted for about forty thousand home sales. In March of this year these loans accounted for fewer than twenty percent of sales The number of foreclosed homes is growing because many people who may have wanted to sell their homes are holding on to them and are waiting for prices to bounce back. Homes in California that have been foreclosed on sell for less than homes that have not been foreclosed on and this brings the prices of all homes down. Across the nation, homes that have been foreclosed on are selling for twenty percent less than like homes that have not been foreclosed on. Across the U.S. the large number of foreclosures is expected to get worse during the next two months. Introductory rates on homes that were bought in 2006 and the previous year are going to expire then.Higher interests rates will start and there will be very few homeowners that will be capable of making the payments. Potential rate cuts may make it a little easier on homeowners however. The prices of homes in California are expected to hit bottom by the fall or possibly the summer. This will be around the time that it is expected that foreclosures will reach a peak. Lenders seem to be a little more willing to extend credit but getting credit will not be as easy as it was when the market is at its peak. It is not certain whether or not the economy will get worse, making it even harder for people, like those who have lost their jobs, to make mortgage payments. Foreclosed homes have assisted some buyers. A parking attendant bought a foreclosed home for two hundred and fifty thousand dollars after spending two years looking at houses that he could not afford. The homebuyer needed to purchase kitchen appliances and a water heater but the plumbing in the home was new. The number of foreclosures has hit California very hard. The state of California only ranks behind Nevada in the number of houses that are in foreclosure.