I just came out of an Alain Pinel group meeting with Leslie Appleton Young, the Chief Economist for the California Association of Realtors. She is one person who makes real estate financial data available, and understandable with clear explanations. In fact, you can test this out for yourself if you go to www.car.org and look at the information and reports under the Economics tab in the upper left corner of the page.

One of the things that left an impression on me about the state of the California Real Estate Market is that our recovery is actually segmented along price points in the market.

Consider:

• Sales of lower priced properties hit bottom in the last quarter of 2007 and in this sector of the market there are now very decent successive quarterly price increases.
• This has resulted in upward price pressure being placed on the bottom of the market as foreclosure properties are sold off in many areas with multiple offers.
• Because of the way the government has handled how properties are foreclosed upon additional foreclosures continuing into 2010 will be spread out over a longer time line which will help this segment of the market continue to stabilize.

However:

• The surprising fact is that in the middle to higher price ranges, the actual declines in many areas in those price ranges may not be over. In fact in this segment, a recent survey found that 8 out of 10 buyers reported difficulty in obtaining financing to purchase their property.
• Despite the difficulty in obtaining financing, home buyers are taking advantage of falling home prices and buying bigger homes at some of the lowest prices per sq ft the industry had seen since 2007.

For me, the conclusion is that for first time home buyers there has been an vast improvement in the affordability of homes at attractive interest rates. But for some higher priced segments of the market, the downward push on pricing may not yet be over.

Posted By: Bill Wygant