Foreclosures In California Causes House Prices To Drop But Sales To Rise

September 24th, 2008

In California the foreclosure crisis has caused price of houses to drop but sales have picked up and risen phenomenally. There was a 13.6% increase in sales in August 2008 from what it was in August 2007. However there has been a drop of 3.8% from July 2008. DataQuick has released the figures. Of the houses that were sold 46.9% came from the foreclosure category.

The average price of a house in California dropped by 35.3% calculating to $301,000 during the year that ended in August 2008. The majority of the foreclosed houses were in the inland area – the region that has taken the worst beating during the current foreclosure crisis. The counties that have large concentrations of foreclosed houses have recorded sharp fall in prices. If the prices had not tumbled to abysmal depths perhaps the sales would not have picked up the way it has. Rich Cosner of Prudential California Realty Office in Southern California commented that the phenomenal fall in prices in the foreclosure ridden regions have lured in a flood of buyers.

From the trend it seems that the prices of modest houses have reached the bottom and would not fall further. This cannot be said of the expensive properties. There are many offers coming for houses priced at $200,000 and below. Multiple offers indicate that the bottom has been reached.

There are grumblings that California is not getting the proportionate share of federal support considering the top position it holds as regards the one of the worst offending states. For consecutive running months it has held its position. Thousands of foreclosure victims about to lose their houses and homes are badly in need of support. With each passing day the number of defaults are increasing.

The Democrat senator from California, Barbara Boxer complains that the state has got only 11% of the $130 million that has been sanctioned for negotiating workouts between lenders and borrowers. Yet California is responsible for over a quarter of the foreclosure postings of USA from January to July this year. The housing bill that became law in July allowed the funds. By it the government could back cheaper mortgages to the limit of a total of $300 million.

Boxer wrote to the administrator in charge of disbursing the funds that “The communities hardest bit by the foreclosure crisis deserve our priority attention.” The agency has yet to distribute $50 million.