California's Median Home Price Posts Gain, but Short Sales & Foreclosures Continue

The median price of a home in California rose for the second consecutive month in April (1.4%).The California Association of Realtors reports that inventories of homes priced under $500K shrank again, but sales of more expensive homes remains weaker.Tightened lending guidelines forjumbo loans continues to be the biggest limiting factor in high-end home sales. In markets like Danville, Blackhawk and areas of San Ramon, the challenges of jumbo loan financing continue to impact the local real estate markets.

For the entire state, April home sales represented a 49% increase over a year ago. Leslie Appletopn-Young, chief economist for CAR says it looks like the median price for a California home is at or near the bottom.

There are two big issues still facing the housing market and a full recovery (not including unemployment) – inflation and adjustable rate mortgages that will reset in 2010 and 2011. Right now, inflation and rising interest rates are what buyers and sellers need to keep in mind. As interest rates rise, we typically see home sales slowing a bit.

Most mortgage brokersand lenders I am talking to (as well as my fellow real estate agents) think the days of less than 5% interest rates are gone for quite a while. With the huge debt issues facing the country, they don't see the government keeping the downward pressure on interest rates. Most expect interest rates to hit 7% before the end of the year.

For homeowners thinking of selling, this is yet another return to the reality that the best price you can expect now, may not be the best price you will get later. Even if home prices bottom, if sales slow and inventory rises, the time it takes to sell a home may rise significantly. Home sales are brisk right now and interest rates remain favorable. Getting your home on the market now, may be the best option. Traditionally the real estate market begins slowing by mid-August.

If you think you might be facing a short sale situation, here is a list of documentation you will need:

• Hardship letter
• Financial statement
• Bank Statements
• Tax returns
• Other lien holders

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Contact Craig for more information – 925-984-4910