According to the most recent data released from C.A.R., (California Association of Realtors) the median price of an existing home fell 26.2% in February compared to the same period last year. More interesting is the fact that the median price of exiting single family homes for February 2008 was $409,240, a 4.8% drop from January's median price.
Some locals in the Silicon Valley feel that we will not see significant declines in the local real estate market particularly in the most desirable areas, yet we are seeing some dramatic price reductions in certain zip codes - I believe that is it just a matter of time until we see a larger impact. Further, a couple of years ago it was difficult to find anything in the $500,000 range, that has changed and there are lots of houses to choose from in this price category currently. In a recent conversation with a broker, he shared that a local two bedroom condo that he sold 2.5 years ago for $450,000, sold just recently for $260,000 further highlighting how condo prices rise in an appreciating market, and decline rapidly in a deteriorating market. A simple strategy to build wealth may be to buy a condo or two at the bottom of the market especially if it cashflows. How do you determine the bottom of the market? There are key indicators that indicate the direction the market is headed, more on that to follow.
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