| Home sales are dropping in Southern | | | | bubble at this point, this is just a return |
| California. For the fourth month in a row, | | | | to more normal market conditions. What we |
| home sales have continued to drop, according | | | | have seen in the past several years is |
| to data for March. At the same time, the | | | | abnormal market conditions. The rapid growth |
| median price for a home in Southern | | | | in the real estate market must eventually |
| California, has climbed above the $500,000 | | | | return to a more normal pace. When we see the |
| mark. This is a divergence of trends. In the | | | | number of home sales slow, especially for a |
| last several years home sales were robust and | | | | multi month period, we can expect prices to |
| increasing and so were home prices. Now home | | | | lag the slowdown in sales by around three |
| sales have slowed but prices are still | | | | months. We should see home appreciation start |
| inching upward in many areas.Home values in | | | | to really slow down soon in southern |
| Los Angeles, Orange, Riverside, San Diego and | | | | California.Inventory is another factor of |
| Ventura counties, increased 14% over one year | | | | price. In this region inventory is |
| ago. Homeowners should not expect that rate | | | | increasing, but not at extraordinary levels. |
| of appreciation for the current year. In | | | | The time to sell a home is increasing. Last |
| March the number of home sales fell almost | | | | spring it was 27 days, now it is 48.The |
| 10%. Sales activity is related to price | | | | county to watch is San Diego. It was the |
| activity. The fact that we are seeing a | | | | first county to accelerate in home value |
| continuing series of months with declining | | | | appreciation and the first to slow. It is |
| sales activity is an indicator that price | | | | seen as a barometer for southern California. |
| activity is soon to follow. The current rate | | | | In the last six months median prices of homes |
| of home value appreciation cannot be | | | | in San Diego county have decreased 2%. This |
| sustained in a climate of falling home sales. | | | | is not indicative of a bursting bubble, but |
| In Southern California the sales activity and | | | | an overheated market that is returning to |
| the rate of price increases reached a peak | | | | normal.Andrew Goldman is president of Metal |
| two years ago. In the current environment we | | | | Rabbit media services, the operator of He |
| are likely to see home values rising at a | | | | has written a number of articles on finance |
| much slower pace or even approaching 0.There | | | | and investment over the last ten years. |
| are no indications that this is a real estate | | | | |