California Housing Market Shows Upswing

Figures collated in February show a small but significant improvement in the housing market in Southern California. As compared to February 2009, prices have risen by about 10%. The positive turn is not limited to sale prices alone. Fewer foreclosures were recorded last month, showing that the local homeowners are in better financial situation than they were last year.

MDA DataQuick, a San Diego based research firm, reports a median price of $275,000 in February for homes in the area. The median price is an important parameter in determining the performance of the housing sector as it gives the midway price at which properties were sold in a period. That means half the sales recorded in February 2010 were at prices above $275,000 and the other half were below this level.

The housing sector nationwide is yet to recover from the crash and even the most optimistic analysts are not harboring a lot of expectations yet. But California is seen as a reliable indicator of the country’s real estate markets, so this could be the first positive sign. A recent report from the Commerce Department showed a decline of 5.9% in new housing projects in February in the East and South where weather is playing spoilsport. In the West, new housing construction improved by 7.9%.

It is also important to note that this is the third successive rise in the median price as far as year on year levels are concerned. An increase of 1.3% was recorded in January 2010. Some analysts believe that prices will begin to stabilize soon, getting into a sideways trend.

Last year foreclosure properties were very much in demand with supply matching the demand, resulting in hardly any price movement. However, as that supply source is drying up, a recovery in prices is on the cards. According to a Bel Air real estate company, the housing market is no longer a purely buyer’s market.

Despite signs of improvement, it might be too early to conclusively say that the housing market is turning positive. Real estate companies, and everyone else for that matter, will be hoping that this is a sign of real recovery. Considering so many economic indicators are tied to the housing market, a substantial price and sales recovery will be a major turning point for the economy.

So is it time to buy a house? Most analysts say not just yet. It would be better to adopt a wait and watch approach.

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