Is California's Housing Market Close to Finding a Bottom?

San Diego-based real estate research firm DataQuick has released its analysis of California's housing market in July. Given the negative trends we saw in May and June, it's not surprising that homes sales and prices continued to tumble last month. The median price paid in July was $252,000, a drop of 0.4% from June and 6% lower than last July; this makes ten consecutive months of year-on-year declines in median prices. In Southern California, the median price of $283,000 was 4% lower than that in July 2010, while the Bay Area's median price of $374,000 represents a 7% fall from last July. In terms of sales, less than 35,000 houses and condos were sold in the state last month, an 11% decline from June and 1.6% lower than July of last year. On the positive side, rates of foreclosures and short sales continued to slow, though they remain high by historical standards.

Another bright side comes from this Sacramento Bee story, which discusses how sales of low-end homes are brisk in Sacramento County these days. In this particular county, July home sales were 12.5% higher than they were last July; with prices now half of what they were in 2007 and the median home going for just $161,000, many buyers here are finding the bargains irresistable. According to DataQuick, almost half of Sacramento-area home sales went for $150,000 or less. This obviously isn't going to herald a return to the days of widespread speculation and soaring home values any time soon. But it suggests that, in spite of government efforts to prevent it, home prices are finally nearing their market-clearing values.