California Home Price Decline Mild … but Existent

The California housing market is caught up in a mild price adjustment compared to past downturns, a report released Wednesdady said.

“Home values are by and large stable; accumulated gains in home values have not evaporated, as some analysts earlier speculated that they might,” wrote Keitaro Matsuda, senior economist for Union Bank of California, in his annual housing report.

California is one of only four states where home prices declined in the fourth quarter, he wrote, although they rose 4.6 percent for the year.

Housing prices rose nationally by 5.9 percent. For that reason, there’s been a nationwide cooling in demand for home mortgages.

Recent job growth and construction constraints mean prices in the Bay Area housing market are less likely to drop significantly, Matsuda said.

A “more dramatic correction” could come in areas where many new homes were built in recent years, however, he warned, including in the Salinas and Central Valleys.

Both the recent housing boom and current slowdown are products of a lack of affordable California homes, he said, a problem state and local leaders need to address.

The median price of a home in the state in January was $559,640, more than twice the national median of $210,000. Yet per capita income is only 7 percent higher, he wrote.