Is California a Model for the Real Estate Recovery?
Like most of you here, I look forward to getting a healthy dose of real estate news daily. Whether interest rates are historically low or Fannie Mae is up river without a paddle or Uncle O is considering another tax credit, it makes for great reading while enjoying a cup of joe. Well, a story this week certainly caught my attention.
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According to Zip Realty’s Q2 “Home Hunter Report“, California is the place to right now if you are a seller, with homes routinely selling over listing price. My first thought was that I was transported back to 2005, but after turning on the news and seeing Obama handing out more taxpayer money I realized that it’s indeed 2010. Berkeley led the way with homes being listed at $575,095 and selling for $619,574 (107% of list price) and an astounding 91 out of the top 100 ‘hot markets’ being in California. Is this a sign that the California tax credit for new home and first time buyer has been effective in kick-starting the market? Quite possibly. Are REO’s being absorbed by the market rapidly enough to release downward pressure on prices? Sure, it could be argued so, in May 36% of all CA sales were foreclosures. And with Californian’s mortgage defaults at a 3 year low, it could limit the amount of distressed properties on the market soon enough (and the laws of supply and demand shall reign).
So should we account California’s moment in the sun (temporary or permanent, we shall see) to Arnold and his tax credit? If so, should other states follow? Floridians in particular would love to know, having 7 out the 10 ‘coldest’ markets. Your thoughts/comments are most welcomed.
Photo: Kevin Cole