Southern California’s Median Home Price Falls 41 Percent Due to Foreclosures

In October this year, the median home price in Southern California has fallen to $300,000, a drop of 41 percent from $505,000 which is the highest price set in 2007. According to a real estate research firm MDA DataQuick, home prices were pulled down by the high number of foreclosed houses available in the market. In October, foreclosed properties accounted for over 50 percent of homes sold.

Median home price in Los Angeles County has dropped to $355,000, down by 29 percent from October 2007. The price is expected to fall further in November if nothing is done to avert foreclosures.

In the Southern California housing market of October 2007, only 16 percent of units sold were foreclosed homes. In October this year, 51 percent of total units sold were foreclosed homes. Continued foreclosures caused more repo homes to enter the market, further decreasing home prices.

In a cycle that has not seen an end, the depressed home prices made borrowers’ homes worthless compared to what borrowers owe the banks, leading to more foreclosures.

Consultant Christopher Thornberg of Beacon Economics, who was among analysts that made a 25-percent price decline forecast in November 2007, predicted that home prices will continue to fall until they have declined by 55 percent from their highest point.

According to MDA DataQuick, San Bernardino County posted the biggest price decline in October, with a decrease rate of 39 percent from prices in October 2007. Orange County had the lowest price decline, with a decrease rate of 27 percent from prices in October 2007.

Thornberg also said that owners of high end homes will try to postpone selling them, but eventually if the foreclosure crisis continues and the housing market does not recover, the owners will also be forced to sell their properties at prices much below their purchase prices.

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