iBooyah.com: Central Valley California Home Price Dropping
While visiting friends and family in the Central Valley over the Labor Day weekend, I visited several of the newer home communities to gauge the housing market in the region. I was please to see new home prices has dropped 20 percent compared to 8 months ago. For example, the same home that was once selling for 400K is now having difficulty selling at 320K.
Major builders such as KB Home, McMillin Home, Lennar and Centex Home all have dropped their prices 15-20% from about a year ago. Some builders are even throwing in options such as upgraded kitchen cabinet and countertop. Other incentives include rebates on closing cost. One builder I visited was offering two weeks vacation in Hawaii for certain homes. There was no longer a waiting list as there were plenty of empty lots available. Centex Home was the only builder that asked if I wanted to get on their waiting list despite many empty lots. I chuckled inside and walked away.
It is not surprising to see the price decline given the region’s average family income is 50K/year and the median home prices were 300K. The ratio has been out of whacked for awhile now. The housing market is now going through a needed correction. Since 2002, the rapid increase of home prices in the Central Valley has been fueled by outside investors snapping up properties as if there were no tomorrow. Now that investors no longer view the Central Valley as an attractive investment, the region will likely see additional 10-15% drop in prices in the next year. Hmm… looks like an opportunity to me!
