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January 03, 2012

California Home Sales Surge While Prices Fall
According to figures released this week by DataQuick, demand for lower-end homes drove an increase in home sales in California in November even as prices fell. The San Diego-based housing research firm said there were a total of 32,670 homes and condominiums sold in the state last month, up 4 percent from a total of 31,400 sold in November 2010. Prices fell on a year-over-year basis, meanwhile, for the fourteenth month in a row.

The decline in median sales price was partially driven by a decline in sales of homes priced over $750,000, which fell by 16 percent from the same month in 2010. Sales were impacted in a number of upscale coastal communities due to a change in the maximum loan values eligible for federal backing, which took effect October 1st. The limits, which vary by county, were lowered from $729,750 to $625,500 in Los Angeles and Orange Counties.

Congress reached an agreement in November on restoring the higher limits for FHA-backed loans, but did not take any action pertaining to the limits on loans backed by Fannie Mae and Freddie Mac. While sales were declining on the higher end of the housing market, buyers continued to hunt for bargains, as sales of homes priced under $300,000 increased by 12 percent from a year earlier, according to DataQuick's report.

Foreigners and investors continued to make their presence felt in the Southern California housing market, as absentee buyers accounted for about one of every four homes sold in November, paying an average of $200,000 each for the homes.

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