State Real Estate Market Outlook
Realty Market Outlook California State Profile - Spring 2006
Homebuilding volumes softened despite sustained home price growth.
Residential permit activity declined in 2005 for the first time in ten years, possibly signaling a change in housing markets with important implications for the state’s construction-dependent job growth.
California home prices continued to increase at a robust pace of 21.1 percent in fourth quarter 2005, up from the third quarter and well above the national average. Similar to employment patterns, price gains in Central Valley markets typically topped the state average, but San Diego area home price growth slumped from year-ago levels to the slowest pace among California metropolitan markets.
Innovative mortgages and investors may be buoying California housing demand. Interest-only and negative amortization loans accounted for 69 percent of non-prime mortgage originations in California in the first 11 months of 2005. During the same period, investors and second-home purchasers accounted for 15 percent of California Alt-A mortgage originations.
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