The California Real Estate market is one of the fastest paced and vibrant in the world. Nowhere else is property traded so fiercely and competitively and at such high stakes as in this state.

A recent report on the number of house sales in California, which was released in December of 2007, showed that more than 25,000 condo units and houses–both brand new and resale–changed hands in that month. As impressive as that figure is, it was in fact virtually unchanged from the house sales figure in November, and is actually down more than 40% from November of 2006, when house sales registered at 43,400. Records show that there has been a steady decline in house sales over the past 27 months, and that December’s sales were the lowest for that particular month ever since records were first kept in 1988.

Median prices for houses also went down almost 3%–or to just over $400,000 in December–from about $412,000 in November. This price represents an almost 15% decline from December of 2006, when the median price of houses was about $472,000. The peak in median house prices was reached in the period of March to May last year, when the price of houses averaged around $484,000.

This drop in median house prices can be explained mostly by the slow sales of high priced properties, which in itself is the direct result of instability in the credit industry. 17,500 homes purchased in California in December 2007 were bought with conforming loans amounting to $417,000, which is a huge decline of almost 30% from December of 2006, when the number of houses bought with the same loan amounted to almost 25,000. With regard to jumbo loans, 4,600 houses in California were purchased for more than $417,000 in this manner, which is a decline of a whopping 70% from December 2006, when houses purchased number more than 15,000.

Other signs show that the real estate market in the state continues to move in different directions. Property foreclosures are at an all time high (we will discuss this in further detail later on in this article), and both adjustable-rate mortgage and multiple mortgage financing has declined drastically. At the same time, down payment values as well as flipping rates have remained fairly constant, and buying activity by owners who do not occupy the properties in question is on the rise.

In Southern California, the extremely low level of house sales in December 2007 has caused many in the real estate industry–sellers, buyers, and lending institutions included–to watch the market closely. While the number of new houses sold in Riverside, Los Angeles, San Diego, San Bernardino, Orange County and Ventura went up .5% from the previous month–about 13,200 from slightly more than 13,100 in November–this still represented a steep 45% decline from the same period the previous year, when houses sold numbered slightly more than 24,200.

One real estate industry analyst has declined to make any forecasts or predications about which way the market will go in the next few months, saying that the present instable condition of the market has made it impossible to predict which way things will go. Many experts agree however that the real estate market will stabilize soon and that a clearer picture will emerge. Until then both buyers and sellers are keeping a watchful eye on the proceedings.

We mentioned earlier that foreclosure activity is on the rise, and indeed during the last quarter of 2007, mortgage default notices were at its highest level in 15 years. Much of this increase in foreclosed properties goes hand in hand with depreciation of home values. Many homeowners have suddenly found themselves in a position wherein they owe more on the mortgage than what the property is actually worth on the market. A large number of those who have been forced into foreclosure may have felt the pressure of high mortgage rates, the loss of income or even the need to move to another state.

One factor that can explain this phenomenon is the decline in median house prices from a high of $484,000 in March of 2007 to just slightly above $400,000 in the latter part of the year. Although this decline was perhaps partially caused by the shift in the type of houses that were sold, this would have undoubtedly still had a significant role to play in the increase of the number of homeowners who were forced to default on their mortgage loans.

The Golden Hill region is located near Downtown San Diego County, California. The community is located between Interstates 5 and 15, just south of the famous Balboa Park.

For the period observed (January through July 2006 compared against January through July 2005), the number of homes sold remained relatively consistent. Approximately 74 single-family homes sold in 2006 and 76 homes sold in 2005.

One method to analyze pricing trends for a particular community is to evaluate the median and average price of homes for a particular month, and compare that data against the same period last year. What follows is a comparison of the median price and average price of homes for the past seven months (January through July 2006), compared against the data for the corresponding time period in 2005.

The median price of homes represents the point at which half the homes are above a particular price point, and half the homes are below a particular price point. The average price of homes is calculated by adding up the sales price of all homes sold in a particular month, and dividing that value by the number of homes sold.

The median price of homes in July 2006 was $572,000, compared to $425,000 in July 2005, which represents a 34.6% increase. The average price of homes in July 2006 was $551,875, compared to $466,636 in July 2005, which represents a 19.5% increase. Approximately 8 homes sold in July 2006 and 11 in July 2005. In summary, there was an upward price trend in July 2006 compared to the same period last year.

The median price of homes in June 2006 was $451,500, compared to $540,000 in June 2005, which represents a 16.4% drop. The average price of homes in June 2006 was $457,600, compared to $514,846 in June 2005, which represents an 11.1% decline. Approximately 10 homes sold in June 2006 and 13 in June 2005. In summary, there was a downward price trend in June 2006 compared to the same period last year.

The median price of homes in May 2006 was $500,000, compared to $430,000 in May 2005, which represents a 13.9% increase. The average price of homes in May 2006 was $545,067, compared to $465,727 in May 2005, which represents a 10.5% increase. Approximately 15 homes sold in May 2006 and 11 in May 2005. In summary, there was an upward price trend in May 2006 compared to the same period last year.

The median price of homes in April 2006 was $442,500, compared to $510,000 in April 2005, which represents an 8.3% drop. The average price of homes in April 2006 was $448,071, compared to $512,067 in April 2005, which represents a 10.9% decline. Approximately 14 homes sold in April 2006 and 15 in April 2005. In summary, there was a downward price trend in April 2006 compared to the same period last year.

The median price of homes in March 2006 was $415,250, compared to $437,500 in March 2005, which represents an 8.2% decrease. The average price of homes in March 2006 was $451,886, compared to $428,375 in March 2005, which represents a 5.5% increase. Approximately 14 homes sold in March 2006 and 12 in March 2005. The data was mixed for March 2006, as the median price dropped and the average price increased from the same time last year.

The median price of homes in February 2006 was $452,500, compared to $512,500 in February 2005, which represents a 6.7% drop. The average price of homes in February 2006 was $483,128, compared to $503,625 in February 2005, which represents a 1.7% decline. About 8 homes sold in February 2006 and 8 in February 2005. In summary, there was a downward price trend in February 2006 compared to the same period last year.

The median price of homes was $455,000 in January 2006, compared to $500,000 in January 2005, which represents a 9% decline. The average price of homes in January 2006 was $446,280, compared to $467,483 in January 2005, which represents a 1.3% drop. Approximately 5 homes sold in January 2006 and 6 in January 2005. In summary, there was a downward price trend in January 2006 compared to the same period last year.

So what does the data tell us? Well, the data above does not reveal a consistent pattern. The home prices for May and July 2006 were up year-over-year in the range of 10% to 35% from the same period last year. However, prices were down 1% to 16% during January, February, April and June 2006, compared to the same time last year. The data for March 2006 was mixed, with the median price dropping 8.2%, and the average price increasing 5.5% for the same time last year. Given the ups and down described above, a longer period of evaluation is needed to determine if a clear pattern emerges. Contact an experienced Realtor to obtain additional insights about the pricing trends in the Golden Hill real estate market.