The median home price for the state has hit a new high and weighed in at $478,000 in June. Home prices in the state have increased 1.9% in one month and 7.4% over one year ago. The rate of home price increase has slowed, however home prices are still rising overall in the state. Some areas of the country such as Phoenix, AZ have seen average home prices decline, but the strong demand for housing in California have kept prices on the move upward.
Mortgage payments for new home buyers in California continue to rise. The typical mortgage payment in June was $2362 which is up $64 in one month. The average mortgage payment is up $130 from June of last year.
The prices continue to rise despite a slump in sales. A number of Real Estate agents are confirming it is a buyers market for the first time in many years. The days a home is on the market has increased significantly. Most homes are on the market now between 60 and 90 days. In the past several years homeowners have gotten used to selling their homes in less then 30 days.
Buyers are becoming more careful in their purchasing decisions. As strange as it sounds, homes need to be priced right and be in pristine condition in order to sell. During the buying frenzy this was not the case. Homes were not always priced right. Teardowns were being sold at what would be called unreasonable prices now. When the buying frenzy was on, homes were purchased with the feeling they would increase rapidly within months.
So does the slowdown indicate the market is ready to crash? Looking at the market indicators, it appears the market is returning to more normal conditions in California and is not on the brink of calamity. To determine this we need to look at market stress indicators. Down payments remain stable. Speculation in the market remains at moderate levels and although rising, default rates are still low. Non owner occupied housing and flipping of properties has leveled off. The use of adjustable rate mortgages is also dropping. All this points to a slowing market, not one that is ready to fall apart.
