Looking at the prices of real estate in the 2005-2006 levels, we had homes in California going over $500k-600k that have now dropped 30-40% from these levels. The median price of a home in March 2007 as reported by C.A.R. was an astounding $582,930 for a single-family detached home. In March 2008, this dropped 29% to $413,980. The projected for 2009 will be at $358,000. With federal interest rates at all-time lows 0-.25% and the trend continuing from December 2008, we can expect things to finally stop declining. This does mean there will be huge changes but it does mean growth will finally begin and you can expect prices to start steadying out.
The line between interest rates and california housing prices is not a direct connection especially with the inflated house prices. The prices we saw from 2005-2006 in California will not be those levels for quite a long time. Also, remember prices move inversely with interest rates. Nationally, when the interest rates start rising again which will probably be a while with the economy these days, the prices of the houses will have to decrease to retain affordability. Before that even occurs, the housing price levels still need to fall furthur.
There’s no stock tips in this article, but some strong information concerning the real estate situation. The California real estate is not representative of the whole national situation but it does help reflect many of the problems we are seeing nationally and I hope it helps clarify what to expect in the future. Check out this link to see a bit more of where this housing trend will continue and what we should be doing right now.