2008 was a tumultuous year for the economy, financial markets, and the real estate market was no exception. The median price was battered as large proportions of highly-discounted distressed sales flooded the marketplace, the annual median price dropped at a record 32 percent in 2008 compared with 2007. However, sales of existing, single-family homes were 27 percent higher in 2008 compared with 2007.
Sales Bounced Back in 2008
Annual sales of existing homes for 2008 totaled 439,740 in 2008, up 27 percent from 346,940 in 2007. Statewide sales continued to be strong in December, as deeply-discounted distressed sales remained at high levels in many parts of the state. In December, sales totaled 544,580 homes, up by nearly 6 percent over November, and up 85 percent over sales of 294,520 homes a year ago. Large year-to-year percentage gains in sales will likely continue, but at a diminishing rate in the next few months as current sales are compared against extremely low numbers that prevailed in the late 2007 and early 2008. In contrast to the headline national housing market where sales have remained virtually unchanged since late 2007, California home sales have improved more than 100 percent compared with the trough set back in 2007.
…But Home Prices Were a Different Story
For the year 2008, the annual median price fell 38.1 percent from $560,270 in 2007 to $346,750. With the economy deteriorating, the financial system struggling to stay above water, and consumer confidence at record lows, distressed properties with deeply -discounted price will continue to affect the price side of the market. Home prices may not show clear signs of stability until the middle of 2009. The significant decline in price was attributed largely to the dramatic change in the mix of sales since late 2007 and the increase in the share of distressed sales. In August 2007, the sub $500,000 price range accounted for 43 percent of sales, in December that proportion accounted for 82 percent. As large as the price declines are, they have dramatically improved affordability and thus have opened up opportunities for first-time buyers to get their foot in the door where they were previously priced out of the market.