Lower prices boost California home sales
California home prices fell a record 40.3% from July 2007 to July 2008.
Last summer, the median sales price for an existing single-family home was $587,560. This July, it was just $350,760.
But according to the California Association of Realtors, the lower prices are luring buyers back into the market.
July home sales were up an equally impressive 43.4% over July 2007.
Even more encouraging is a big drop in California's backlog of unsold houses. The state had a 6.7-month supply of existing single-family homes at the end of July, down from a 10-month supply in July 2007.
The record number of foreclosures in California is the major reason prices have declined so dramatically.
Lenders almost always sell those homes at a discount, dragging down the median sales price.
But the value of many foreclosures is lower than it should be because they're in such awful condition, having been trashed by angry owners and poorly maintained by the banks and mortgage companies that seized them.
"During the boom, nine out of 10 houses for sale in many markets were in prime condition," Glenn Kelman, CEO of the online discount broker Redfin, told CNNMoney. "Now, for every 10 houses, at least three are dogs."
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