Yikes! This is ground zero in the California real estate bubble.
Atwater is suffering the most. Its median home sales prices have plunged 41.6 percent since the peak. This weekend, Pacific Union Homes dropped the price $140,000 on one of its new Claremont Reserve homes. That 3,144-square-foot, five-bedroom house is now $352,310.
Prices are way down in Salida, too. The median peaked at $415,000, but was at $277,000 in September — a 33.2 percent drop.
Patterson prices are off 29.7 percent. Ceres prices have dropped 24.7 percent. Parts of Modesto are down 33.3 percent, parts of Merced are down 35.8 percent, parts of Manteca are down 26.6 percent and parts of Turlock are down 22.7 percent.
3 responses so far ↓
1 Cbass // Oct 30, 2007 at 4:43 pm
It is a good thing nothing like this could ever happen in AZ where 2/3 of our economy revolves around realestate.
So if the prices in the outlying areas continue to get hammered then I am assuming that will put pressure on prices for homes on the fringes. Which will in turn drive prices down into central Phoenix. Sort of like a financial implosion! Do you have any thoughts on this John?
2 REstate // Oct 30, 2007 at 5:19 pm
CBass: You are right, house prices depreciation usually start in the outer area. It happened before in New York and other cities. In Phoenix, it happened in Maricopa first, then in places like Queen Creek, especially where they overbuilt. Older and better located neighborhoods are more resistant, because more people have paid their houses completely and shortest commute, especially now that we have relatively high gas prices.
September and October 2007 were very bad months for sellers, but I think those who sold will be happy they did it at that price and not 10% lower, something we should see soon. Inventories are building way too fast to call a bottom right now.
3 Brian // Nov 1, 2007 at 11:05 am
Cbass, once again you are right on the mark. People who think “it can’t happen here” are fooling themselves. The bubble must be resolved. There must be a reversion to the mean, which is median price of around $160K in Phoenix metro, according to the ASU / MLS data. Once that has happened, the median will have moved from $260K to $160K which looks like a 40% decline to me.
This can’t be good for the Phoenix area construction industry, or other parts of the real estate complex.
I am not sure how this process (deflation of the bubble) could be stopped now that it has started. It would require a gigantic bail-out by the Fed government that would make the Resolution Trust Corp like like child’s play. All sub-prime, adjustable rate mortgages (several $ trillion worth, nationally) would have to be reissued as 30 year fixed mortgages at the original teaser rate of maybe 4% on average. How much would that cost the Feds (really, us tax payers)?
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