Median Home Price In California

California Median Home Price has risen to $522,590. While prices are up, sales are down 2.1% from the same period last. Clearly the concerns about affordability (and the fact that not many middle class people can now afford a home in California). Another interesting trend is the increase in unsold inventory.

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2005 was 2.8 months, compared with 1.6 months (revised) for the same period a year ago.

This is a near doubling in one year, while not surprising, given that prices have shot up. The main engine of demand, low interest rates, no longer appear to be the engine they once were.

Thirty-year fixed mortgage interest rates averaged 5.72 percent during May 2005, compared with 6.27 percent in May 2004, according to Freddie Mac. Adjustable mortgage interest rates averaged 4.23 percent in May 2005 compared with 3.88 percent in May 2004.

Thirty year fixeds are now .54% cheaper than they were are year ago, yet demand is slacking for real estate. As my previous post noted, people are now opting for the security of a fixed interest rate. Given that you are only seeing 1.49% difference as opposed to May 2004 when the difference between an ARM and 30 year fixed was 2.39%. These point to a general slowing of the California real estate market but since supply is so tight, prices haven't fallen yet. Look for more people to be re-financing into fixed rate mortgages as this continues. There will be a great deal of re-finance business for the mortgage brokers.