Lisa Simpson
May 6,2010
In: Finance

Signs of Recovery in the California Home Market

Signs of recovery in the California home market.

The home market in South California showed signs of recovery. The average sales prices of homes as well as home sales have improved from last year’s figures. Buyers scurried to take advantage of tax credit, plunging interest rates and cheap prices of foreclosed homes.

In fact, the average price of homes increased by 14 per cent s compared to the same period previous year. The average price of homes is now $285,000. In Orange County, that is the region’s costliest market, the median price increased by 12.2 per cent to $432,000. That happened because the foreclosed properties in the region sank. More homes were sold.

"There is no question that prices at the lower end of the market have stabilized and are showing some increases," said the director of the Gary Anderson Center for Economic Research at Chapman University, Esmael Adibi. "While this is welcome news, the word of caution is people should not really see this as the values of homes changing. It is mostly the mix we are seeing change." Sales would definitely increase in these areas, experts observe.

Also defaults have gone up in these regions. That has motivated a few sellers to place their homes in the market. The jump in median figures signals that the depressed real estate market could be coming out of the crisis that it had plunged into a year ago. In 2008, there was a deluge of foreclosed homes in the market. However, such fears have abated as more homes in the costly market are being put up for sale.

"It’s almost like a boom-year figure," said the director of the UCLA Anderson Forecast, Ed Leamer,. "But the numbers over the last several years have been influenced by the number of bank-owned properties, and the banks were selling their homes at rock-bottom prices."

The principal of Beacon Economics, Christopher Thornberg, said, "Right now the question is not whether the housing market is in recovery. The real question is how sustainable that recovery is, and that is where the gray area resides. The market is being driven by government policy and not by fundamentals, and now the government is starting to back off."

The homeowners are eager to take advantage of the Federal tax credit that has been extended by the government. A couple, for instance, says, "We want a big treehouse and a play area, and the place that we found has a really cool private backyard.”