California Existing Home Sales Fall 17%

The California realtors have this on Decembers' sales. "The median price of an existing home in California in December increased 15.6 percent and sales decreased 17.6 percent compared with the same period a year ago, C.A.R. reported today. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in December 2005 was 3.6 months, compared with 2 months (revised) for the same period a year ago." "Sales dropped 37.6 percent in Monterey County, 34.8 percent in the Monterey Region, 32.8 percent in Northern Santa Barbara County, 32.2 percent in the Sacramento area, 30.7 percent in Northern California, and 30.4 percent in Santa Cruz County from December 2004 to December 2005, the association reported." And Broderick Perkins has this at Realty Times. "Some mortgage shoppers in the Golden State may be the first to be underwritten out of the home buying market. A data crunching company's new index, designed to help Californians choose less risky housing markets, says California lenders, fearing rising default risk levels, are already more closely scrutinizing mortgage applications." "During the last six months of 2005, risk levels for new mortgages statewide increased an average 28.6 percent in the Golden State, according to San Juan Capistrano-based HomeSmartReports.com, which for the first time offered such data to the public." "'The frenzy we saw in more coastal markets last year moved inland at the same time as interest rates were edging up. Some neighborhood sales patterns are showing signs of market stress, and buyers may be stretching their finances. Lenders are evaluating loan applications and appraisals much more carefully,' said Mike Ela." "Ela said the problem is exacerbated by home builders developing large plots of homes and offering easy-money, no and very low-down payment financing to buyers stretching to become home owners. Home owners with no or small equity stakes in their homes are more likely to quit home ownership. 'The moment things get tough, people walk away from homes and you are left with an excess supply of homes,' Ela said." "Even if it means putting a damper on the housing market, lenders have little choice but to curtail their risk. Jonathan Lansner a columnist with the Orange County Register said local lenders including New Century, Impac and Downey were experiencing smaller net interest margins, the gap between a banker's cost of money and income from loans, compared to the margins a year ago." "The risk factor is lowest in coastal Southern California and the San Francisco Bay Area and highest in the rural Central Valley. The greatest increases came in the Salinas and Santa Cruz-Watsonville areas."