If you are completely confused about the housing market in California you have lots of company. While prices seem to have dropped on some properties others are maintaining prices and in some cases going up in value. This is especially true in the cities along the coast in Southern California. Properties in coastal cities that are on the beach have seen increases on prime location properties. Builders are not ready to drastically drop prices on new construction. New home sales in many Beach Cities are slow but prices are about what they were last year.
The real estate market has slowed down yet only 24% of buyers in California can afford a home today compared to 28% a year ago. According to several articles in The LA Times, in San Francisco, the highest home price market in the United States, sales are down 17% over last year but prices are up 2.8% to $667,300. In Los Angeles County, the third highest priced area in the United States, sales volume dropped 25% from last year but prices rose 8.9% to $533,700. Fewer people are buying but many of those buyers are purchasing upper level properties. Beach front properties are selling very well and at record prices.
First time buyers appear to be more reluctant to purchase then people who have owned a home and are looking to buy another property. Trade-up buyers are usually also sellers so they see the market from both perspectives. They have found that prices on what they want to purchase haven't seen massive declines and therefore they are not willing to sell at hugely discounted prices.
Many first time buyers are still convinced that real estate prices in California will drop 25-30% next year. They believe foreclosures will be rampant. There will be some foreclosures but not on a huge scale unless the economy tanks as it did in the 1990's. If potential buyers are going to be employed to buy at the bargain prices; then it follows that sellers will also continue to be employed and will not lose their homes in foreclosure.
Buyers should be paying more attention to interest rates. Smart buyers will take advantage of low rates. Remember: prices always fluctuate but a good interest rate will last for 30 years.
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