California Housing Market Continues to Stall

As the housing slowdown continues throughout the nation, many people are left wondering about its effect on our economy in general.

Although the housing market continues to stall, it seems as if our economy is fairing okay. Meaning nothing too good, but nothing too bad.

Concerns were raised about the status of our economy since the health of the housing market directly affects the health of our economy. The two go hand-in-hand.

An October 13, 2006 article by The San Diego Union Tribune’s staff writers and other news sources, “Economy’s growth a mixed bag,” looks at how California’s housing and the economy are all affecting one another.

“The economy continued to grow in the early fall despite a ‘widespread cooling’ in the once-hot housing market, the Federal Reserve reported yesterday. The Fed's latest survey of business conditions nationwide found the economy expanding with growth described as ‘moderate or mixed.’”

So although the economy is still reporting positive figures, the same can not be said for the housing market. In fact, the Fed recently reported that there has been a slowdown in the majority of their 12 regions, with most reporting lower prices and a rising inventory of homes for sale on the market.

“In Southern California, the cooling was confirmed by data from DataQuick Information Systems. The overall median price for the region in September was $484,000, up 1.9 percent from a year ago, representing the smallest year-over-year rise since February 1997.”

“San Diego County, as reported yesterday, experienced a decline of 4.4 percent to $476,000, and Ventura County was not far behind with a 3.3 percent decline to $584,000.”

Orange County, Los Angeles County, Riverside County and San Bernardino County were all some of the lucky few cities who actually saw an increase in their median home prices.

But the Fed reported that all counties in the Southern California region reported declining sales.

“‘Now is when things get interesting,’ DataQuick President Marshall Prentice said in a statement. ‘The vast majority of home buyers have done very well for themselves the past few years. As things level off, though, we should be able to quantify how many buyers overpaid during the frenzy, and by how much.’”

It seems as though most analysts and experts agree that this housing slowdown was necessary for things to return to normal after the big housing “boom” of the past few years. Although housing is going to have at least some affect on the economy, it may actually be for the best in the long run.

“Last week, Federal Reserve Chairman Ben Bernanke said housing was going through a ‘substantial correction’ that he estimated would trim economic growth by a full percentage point in the second half of the year.”

“The economy grew by 2.6 percent in the second quarter, less than half the pace of the first three months of the year, as it was battered by soaring gasoline prices, rising interest rates and the cooling housing market.”