With about 10 percent of the US housing stock and about 17 percent of its total value, California’s housing market has a large impact on the economy of not only California, but also the nation as a whole. To get an accurate picture of real estate market conditions in the state, it is necessary to evaluate multiple market indicators. This Mortgage Market Note attempts to provide a comprehensive look at the most recent available data on housing market conditions in California.
On balance, the data reveal that conditions remain very weak. While inventory levels and the rate of sales have improved significantly since late 2007 and early 2008, other data suggest that those apparent signs of normalization occurred in large part as a result of a sharp increase in distressed sales. Also, data suggest that true inventories may be understated because discouraged sellers have taken their homes off the market as they await a rebound in prices.
Although conditions remain weak and some of the positive indicators certainly can be caveated, when taken collectively, the data also provide some signs that the rate of deterioration in California markets may have slowed in the latest quarters. These improvements, while modest in scale, came before the impact of recent stimulus efforts. The effects of these measures, which include the American Recovery and Reinvestment Act and the Making Home Affordable program, will be felt in coming months.