The statewide median home price will fall an estimated 31.7 percent in 2008, to $381,000 — which is the first annual decline in the state since 1996, according to a California Association of Realtors report released this week. An additional 6 percent drop is expected in 2009, to $358,000.
Meanwhile, sales of resale detached homes are expected to jump 12 percent to 395,600 in 2008 compared to 2007, with a projected additional 12.5 percent gain in 2009.
The sales jump and the tailspin in prices has a lot to do with a spike in distressed sales — about 19.8 percent of sellers sold their property because they were in default, were in a foreclosure process, or owed more on their mortgage than their home would fetch in a sale.
"The increase in sales is largely attributed to the growth in the absorption of distressed properties with markdowns in prices," the Realtor group reported.
The number of sellers who sold their home at a loss rose from 11.9 percent in 2007 to a record 22.2 percent in 2008.
The group’s 2008-09 State of the Housing Market report also found that distressed properties sold during 2008 had a median sales price of $330,000, a median price per square foot of $197, and a median size of 1,600 square feet.
About 54.8 percent of the distressed properties sold this year were foreclosed, bank-owned properties (REOs), while about 31.2 percent were short sales and about 14.1 percent were in a foreclosure process.
By comparison, non-distressed properties had a median price of $541,000, a median price per square foot of $315, and a median size of 1,766 square feet.
About 80 percent of homes sold in 2008 were discounted, and the discount between the sales price and the list price jumped from 4.3 percent in 2007 to a record 7.5 percent in 2008 — the historic average is 2.8 percent, the Realtors group reported.
About 20.3 percent of sale transactions fell out of escrow in 2008 — mostly because buyers could not secure a mortgage or changed their minds.
About 47 percent of sellers who owned their homes for less tan three years had a net cash loss on their home sale in 2008 — a gain from 34 percent in 2007 — while 3 percent of sellers who owned their homes for more than five years had a net cash loss.
For resale homes — including single-family homes, condos and town homes — the median price dropped 17.8 percent in 2008 to $440,000, compared with $535,000 in 2007.
While the share of first-time buyers increased from 30.4 percent in 2007 to 35.9 percent in 2008, this was below a historic average of 38.3 percent for the state and "more restrictive lending standards and the credit crunch also resulted in many first-time homebuyers’ inability to qualify for a mortgage loan."
The use of second mortgages in home purchases declined from 32.7 percent in 2007 to 9.3 percent in 2008 — that compares with 43.4 percent in 2006.
Also, the percentage of buyers receiving FHA loans jumped from 1.2 percent in 2007 to 18.8 percent in 2008. And the share of adjustable-rate and hybrid loans among new first mortgages slid for the third straight year, falling from 20.2 percent in 2007 to 7.5 percent in 2008.
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