What Goes Up, Must Come Down

As California goes, so goes the nation – and then some.

There's plenty of pain to go around as a result of the crumbling national housing market, but some analysts are predicting an even more painful and longer-term collapse for California.

A 9 percent fall in average home prices statewide in California has been predicted for 2008 by Esmael Adibi, director of the Anderson Venter for Economic Research at Chapman University.

As much as a 20 percent decline for 2009 may be possible.

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"We [California] disproportionately enjoyed much higher home price appreciation over the last several years with the uses of subprime and Alt-A-loans," Adibi told SFGate.com.

In San Mateo county, for example, the median asking price for a home in November, 2005 was $948,000, according to Richard Calhoun, owner of a local real estate firm. In November, 2007, the price was $767,000, a drop of about 19 percent.

California houses now remain on the market 100 days on average, compared to 59 days in 2005. Sales are also down, with a meager 517 last month for Santa Clara County, a level not seen since the worst month of 1998.

But the sickly housing market is a national epidemic. Previously booming areas like Arizona, Florida, Nevada and New York, among many others, are suffering severely, with no end in sight for several years to come.

In the once-sizzling Phoenix, Arizona market, permits for single-family housing for 2007 at 32,000 are half of what they were in 2005. Only 30,000 are expected for next year, says the Business Journal of Phoenix.

Phoenix metro home sales dropped to a record low in September, the Arizona Republic reported, with one-third of every home on the market vacant.

The large number of empty homes are due to foreclosures, homeowners who have moved elsewhere, and real estate investors and speculators trying desperately to unload properties of ever-diminishing value.

When houses are sold in Phoenix, there's a disparity between asking price and sales price of $31,000. Homes listed at a median price of $265,000 sell for $234,900. The downward trend is expected to continue until at least 2009.

Florida housing is similarly hurting. Along with California and Nevada, Florida has the nation's highest foreclosure rate for the past few months.

In Sarasota and Manatee counties, for example, new home sales have declined from a high of 530 a month since the boom of 2005 to 220 a month, more than a 50 percent drop. During the same period, sales of existing homes have sunk to lee than 550 a month from a high of 2,050 during the boom of 2005.

At least one expert, however, says Florida has hit bottom, and although recovery is inevitable, it may take months before it kicks in.

One good sign is the low number of new housing starts – 4,500 projected for 2007, down from the 2005 high of 14,000 – indicating reduced housing inventory and an expected catch-up in demand as credit eases.

New York state, with the country's highest real estate prices in Manhattan, took a hit in both sales and median selling price compared to figures for 2006, according to the New York State Association of Realtors. Yet a modest upturn in sales of existing single-family homes contributed some light in the state's otherwise gloomy housing picture.

Month-to-month sales figures show a 4.4 percent increase in the October 2007 median sales price of $219,250 compared to the September median price of $210,000. Unit sales also increased to 7,864 in October by 6.5 percent over 7,384 sales the previous month.

"The New York state housing market has begun the fourth quarter on a more positive note with a rebound in sales and median selling price compared to September 2007," said Charles M. Staro, CEO of NYSAR.

But there were also positive notes of optimism as sales inched upward from their currently low bases in all the metro areas and states surveyed, and this week several economists say the housing market is about to stabilize.

When, exactly, they can't say, although many look for a bottoming-out about mid-2008 as a prelude to recovery.

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