Prices Falling In California
It's not just Silicon Valley anymore; prices are faling all over California.
In fact, it's happening all over the US. Analysts are starting to talk "economic slow down" and declining home prices are just part of the picture. Slowing home sales is signaling the end of a boom that has created completely unsustainable double-digit home price increases, and has resulted in too many home that no one could afford.
While people have been talking "slow down" for some time, it still comes as a bit of a surprise. However, it shouldn't. There has been a "perfect storm" of rising interest rates, slowing job growth, incomes that didn't keep pace with inflation and rising energy costs. The consumer was caught in the squeeze.
In the end, the buyer stopped buying. Sellers had to cry "Uncle" and lower prices. Still, even with lower prices, houses are on the market longer. Frankly, it looks as if prices will go still lower. Sellers that are clinging to higher price expectations have seen their homes stagnate on the market, until the price is dropped sufficiently (or an exceptionally optimistic buyer with money to burn comes along).
According to the California Association of Realtors (CAR), existing home sales have been declining steadily every month since October 2005. That's almost a full year of this trend. We also need to keep in mind that this slow down long preceeded the current slump in prices. More and more areas in California are moving to the falling price hit list. By this past August, 12 of the 20 regions tracked by CAR had home prices down.
The slowdown is deepening.