Home Prices in Freefall

What went up fast is coming down faster:

Signs of distress are piling up in the California housing market, where prices are falling at three times the national rate of decline.

--Statewide, median sales prices fell by a stunning 26% from year-ago levels in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed's interest rate-cutting campaign "will have little near-term direct effect on the housing market."

--In the San Fernando Valley, losing a home to foreclosure is now almost as common for families as buying a home. The L.A. Daily News: "During January and February, there were 1,084 foreclosures and 1,335 sales of houses and condos in Valley communities from Glendale to Calabasas, according to the San Fernando Valley Economic Research Center at California State University, Northridge."

"It's bad. It's really bad," market analyst Nima Nattagh told the Daily News.

The California Association of Realtors reports median prices fell 27.2% from year-ago levels in the hard-hit Inland Empire east of Los Angeles, 30.9% in Sacramento, and 39.1% in Santa Barbara County.

On a percentage basis, the California price meltdown is more than three times as severe as the national decline of 8.2% in median prices reported this week by the National Association of Realtors. On an absolute basis, the California meltdown is even more severe: Nationally, prices fell over the past year at a rate of $338 per week; in California, prices fell at a rate of $2,788 per week.

If you're like me and bought your house 18 years ago and haven't gone crazy with refinancing, the drop in prices is annoying but not devastating. For many who purchased their homes in the last two or three years, or who refinanced all the equity out of their house, this is big trouble if they find themselves having to sell.

Right now there's almost nothing for sale in my neighborhood, and in this area the homes move fairly quickly most of the time. I've even gotten a couple of calls from realtors who claim to have buyers interested in this area. You never know if that's true, or if they're just fishing for a listing. Since I haven't had any calls like that for a long time, it tells me that perhaps the market is about ready to start calming down again.