Coachella Valley leads the way in home price stabilization..

Great information for Buyers concerned about falling prices in the Coachella Valley..Buyers MUST look at LOCAL area statistics.

Before we examine the nature of negative equity, let us first look at a few of the biggest MSAs in California and their negative equity market share:

The above data comes from reports from First American CoreLogic.  It is rather obvious that nearly every major MSA in California is underwater.  North, South, East, or West it really doesn't matter.  Negative equity is a big part of the market.  Someone can look at the above chart and say well at least Orange County or Los Angeles isn't that bad.  Actually there is a large amount of shadow inventory in both of those areas as we pulled up in previous reports.  Negative equity is massive in these areas yet the above chart doesn't highlight this fact because it is focusing on what happened and not on what is going to happen.  What I mean by this is areas like the Central Valley and the Inland Empire have giant negative equity numbers but these areas have also seen the bulk of home sales in the last year.  So current prices actually reflect a more realistic valuation.  Therefore, when we analyze the data we get a more accurate look of what is going on.

Take the Inland Empire above with over 50 percent of homes with a mortgage being in negative equity.  Will prices fall further?  Hard to say but these counties have already corrected the entire housing bubble:

So even though negative equity is enormous, sales volume is indicating that the market is now getting closer to finding a stable point.  However, areas like L.A. and Orange County are largely still in bubbles as the above chart indicates.  Just because sale volume has been weak in these areas the overall market hasn't shifted much.  (courtesy of drhousingbubble)