By Oscar Wei, Senior Research Analyst

Encouraged by record low levels in interest rates and continued decline in home prices, motivated home buyers helped the statewide sales improved for the fifth consecutive quarter since bottoming out in the fourth quarter of 2007. Sales of existing single-family homes surged to 590,390 in the first quarter of 2009, an increase of 9.7 percent from the fourth quarter of 2008, and a jump of 82.7 percent from the first quarter of last year. The sales level was the highest since the third quarter of 2005 when sales reached a near-record of 634,090.  

Meanwhile, the median price for California continued to decline as deeply-discounted distressed sales remained at high levels in many parts of the state. The median home price for existing single-family detached homes dropped 40.1 percent from a year ago to $250,640 in the first quarter of 2009, reaching a level not seen since early 2001. 
 
Southern California

Sales activity in Southern California followed the sales trend of the state closely with non seasonally-adjusted first-quarter sales increasing 95.8 percent on a year-to-year basis from the first quarter of 2008. All regions in the area experienced an increase in sales of over 50 percent from a year ago, with the Riverside/San Bernardino region growing the most at 141.7 percent. The median price for Southern California decreased 39.0 percent year-to-year to $259,000 in the first quarter of 2009, and had been declining in the range of 40 percent for three consecutive quarters. Home prices fell in all regions with year-to-year declines ranging from a drop of 51.6 percent in the Palm Springs/Lower Desert Region to a drop of 28.3 percent in Orange County.

Bay Area

More homes were sold in the San Francisco Bay Area, but the sales increase was not as strong as that of the state or Southern California. Home sales in the Bay Area increased 33.9 percent year-to-year in the first quarter of 2009, but were still far below the growth rate of the state. All counties except Marin and San Mateo registered sales increases when compared to the same quarter of last year. Solano and Sonoma counties, where home sales were comprised of mostly distressed properties, continued to show significant sales growth. Counties with higher home prices such as Marin, San Francisco, and San Mateo, however, continued to perform at or below last year’s sales levels, as the lack of funding for jumbo loans remained an issue to many home buyers in the area. The median price for the Bay Area dropped 42.7 percent year-to-year to $401,980 for the first quarter of 2009. Prior to the fourth quarter of 2008, the decline in home prices in the Bay Area was relatively mild compared to the state as a whole, but has caught up with the rest of the state since then. Contra-Costa, Marin, and San Francisco continued to show moderate price depreciations in the mid-20 percent range, as compared to the 40 percent shown at the state level.   

Central Valley

The Central Valley region continued to have a high ratio of distressed sales to total sales, contributing to significant growth in sales and sharp decline in prices. After falling more dramatically than the other regions of the state in 2006 and 2007, sales started leveling off in the first quarter of 2008 and have been rising since then. Sales in the first quarter of 2009 increased 121.9 percent for Fresno, 119.5 percent for Kern, 168.5 percent for Merced, and 80.9 percent for Sacramento, from last year. The Central Valley region also experienced a longer period of price decline when compared to the state as a whole. Median prices for all of the above counties have been declining since they peaked in the mid 2006, a year earlier than when the statewide median price hit its record high. Counties in the region had year-to-year price decreases ranging from 49.8 percent for Merced to 34.5 percent for Sacramento in the first quarter of 2009.


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