California Home Prices Up, Despite Subprime Problems

Despite increasing mortgage delinquency and foreclosure rates in California...
By: Kate Berry and Harry Terris: REALTOR® Magazine Online
The state's median home price shot up 4.8 percent to $591,180 during the year-over-year period ended in May, according to the CALIFORNIA ASSOCIATION OF REALTORS®.

A recent report from the Mortgage Bankers Association showed a subprime delinquency rate of 7.5 percent, versus a prime delinquency rate of 1.22 percent for adjustable-rate mortgages, in California during the first quarter.

University of California-Los Angeles Anderson Forecast economist Ryan Ratcliff believes job gains in the professional services sector could prevent a recession, provided that the state — which the California Association of Mortgage Brokers says accounts for 48 percent of home loans nationwide — is not hit too hard by problems in the subprime market.

Following years of rapid home-price appreciation, PMI Group Inc. Chief Risk Officer Mark Milner says Los Angeles, Santa Ana, Oakland, Sacramento, and San Diego have a more than 50-percent chance of price drops in the coming years.