California real estate continues to free fall.
In the latest seismic shock to hit California’s real estate market, the California Association of Realtors (CAR) reported that home sales in the Golden State decreased 28.5 percent in February compared with the same period a year ago, while the median price of an existing home fell 26.2 percent.
Median home prices fell 27.2 percent from last year’s levels in the Inland Empire east of Los Angeles, 30.9 percent in Sacramento, and 39.1 percent in Santa Barbara County.
The California home price meltdown is more than three times as severe as the national decline of 8.2 percent in median prices reported this week by the National Association of Realtors. Nationally, prices fell over the past year at a rate of $338 per week, while in California, prices fell at a rate of $2,788 per week.
According to the CAR, “The median sales price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2 percent decrease from the revised $554,280 median for February 2007.”
The February 2008 median price fell 4.8 percent compared with January’s revised $429,790 median price.
CAR attributed the continuing servere declines to the tight credit market.
“Although sales rose for the fourth straight month in February by 9.5 percent compared to the previous month, they continue to be dragged down by the ongoing effects of both the credit/liquidity crunch and tighter underwriting standards that have reduced the pool of qualified buyers who can obtain a loan,” CAR President William E. Brown said.
CAR also called for legislative action to increase FHA loan limits, reduce FHA downpayment requirements, and include condominiums.
According to Brown, “It is crucial that FHA reform legislation currently under consideration by congress include higher loan limits for high-cost states like California,” he said. “The proposed legislation also includes a reduction in the down payment requirement for FHA loans and will include condominiums in the FHA single-family program, which will make it easier for buyers in the condominium market to qualify for loans.”
CAR’s Vice President and Chief Economist Leslie Appleton-Young said that the Fed’s recent action to reduce the federal funds rate “will have little near-term direct effect on the housing market.”
Adding to California’s real estate woes, Los Angeles-based KB Home, one of the nation’s biggest residential homebuilders and a major player in the California real estate industry, announced today that it posted a loss of more than $268 million in its first quarter as weak home sales amid a worsening housing market forced the company to take a large write-down related to falling home prices.
Its shares fell almost 4 percent in midday trading.
The average selling price of KB’s homes dropped 7 percent to $248,200 during the quarter, with homes in the West Coast posting the sharpest drop, falling to $392,600 from $470,400 a year earlier.
”Until prices stabilize and consumer confidence returns, we believe inventory levels will remain significantly out of balance with demand,” Jeffrey Mezger, KB Home’s president and CEO said. ”We do not anticipate meaningful improvement in these conditions in the near term, as it is likely to take some time for the market to absorb the current excess housing supply and for consumer confidence to improve.”