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California's median home price falls 38 percent

2009-01-22 12:41:02

By TERENCE CHEA, Associated Press Writer Terence Chea, Associated Press Writer

Wed Jan 21, 8:38 pm ET

SAN FRANCISCO The median home price in California plummeted 38 percent in

December from a year earlier as low-cost foreclosures boosted sales but lowered

property values, a real estate tracking firm said Wednesday.

The median price for California houses and condos dropped to $249,000 last

month from $402,000 in December 2007, according to San Diego-based MDA

DataQuick. The median price is the point where half the homes sold for more and

half sold for less.

The California median home price is at the lowest point since February 2002,

when it was $245,000. It marks a 49-percent decline from the peak of $484,000

in the spring of 2007.

An estimated 37,836 homes were sold in California last month, up 18 percent

from November and 48 percent from December 2007, according to DataQuick.

The housing market is being driven by bargain hunters snapping up bank-owned

foreclosure properties, which accounted for 58 percent of existing homes sold

last month, up from 24 percent a year earlier.

"The processing of these distressed properties is almost reaching a frenzied

level," said John Karevoll, a DataQuick analyst. "Many of the banks just want

to get these properties off their books. People are flocking to buy these

foreclosure properties."

Richard Green, director of the University of Southern California's Lusk Center

for Real Estate, said the California housing market is being hammered by tight

credit markets, expectations of further price declines, a rapidly deteriorating

economy and rising unemployment.

"Until the economy stabilizes, it will be hard to see the housing market

stabilize," Green said. "If you see the unemployment rate turn around, that's

when you'll start to see housing prices bottom and start turning in the other

direction. Until that happens, I'm pretty gloomy."

DataQuick also reported Wednesday that the median home price in the nine-county

San Francisco Bay area fell 44 percent, from $587,500 in December 2007 to

$330,000 last month. That's the lowest since March 2000, when it was $320,500,

and marks a 50-percent decline since the peak of $665,000 in the summer of

2007.

A total of 6,889 houses and condos were sold in the Bay Area in December, up 20

percent from November and up 36 percent from December 2007, according to

DataQuick.

Most of the Bay Area sales took place in the East Bay counties hit hardest by

foreclosures. The median home price fell 50 percent to $252,000 in Contra Costa

County, 37 percent to $338,000 in Alameda County and 42 percent to $213,500 in

Solano County. By contrast, it dropped 16 percent to $616,500 in San Francisco.

Sales of more expensive homes have stalled as would-be homebuyers run into

trouble securing mortgages.

The upper half of the Bay Area housing market won't recover until the market

for "jumbo" loans for more than $417,000 recovers, Karevoll said. Such loans

used to account for more than 60 percent of the region's real estate financing,

but only made up 22 percent of loans last month.

On Monday, DataQuick reported that the median home price in Southern California

fell nearly 35 percent, from $425,000 in December 2007 to $278,000 last month,

DataQuick said. The median price for the six-county region peaked at $505,000

in mid-2007.

There were 19,926 homes sold in Southern California last month, up 19 percent

from November. Foreclosures accounted for 58 percent of December sales.

"It's very difficult, if not impossible, to predict what's going to happen,"

Karevoll said. "It's hard to project when the operating instructions for the

market are no longer valid."