Prices of homes and foreclosure condos for sale in California have declined by a huge margin since the start of the housing market crisis. With current prices at historic lows, one would expect buyers to flood the state’s residential market. However, some traditional homebuyers are still hesitating when it comes to making a purchase.
Even with foreclosures in Los Angeles and in other areas of the state being offered cheaply, a lot of homebuyers are reportedly unsure whether purchasing a house in the region will benefit them in the long run. A recent study somehow explains the reservations felt by some consumers. According to a study from LendingTree, although California is the biggest residential market in the country, its housing market is still unhealthy five years on after the crisis started.
The study ranked California at number 50 among the 50 U.S. states, plus Washington D.C., making it the second state with the unhealthiest residential market. Some local market analysts stated that the plummeting prices of residences in the region, caused mainly by an oversupply of cheap foreclosures in California, are a big part of the reason why the market is finding it hard to get back on track. Meanwhile, the study revealed that criteria used included the ratio of debt against income, homeownership, unemployment, ratio between loans and value and underwater mortgages.
The study also asserted that some U.S. states will take longer to recover than other areas and recovery will likely be uneven. In California for example, one part of the state may recover faster than another local area. Local housing analysts stated that markets with the highest inventories of foreclosure condos for sale and distressed homes are the most likely to remain in a slump for a longer period.
In California, the huge amount of foreclosed properties has caused a lot of people to stay away from ownership. This resulted in the area having a homeownership score of 56.1%, lower than the national level of 64.6%. Unemployment is another factor hindering California’s housing recovery, the study further claimed, with the region’s unemployment rate at 12% while the nationwide average is at 8.8%. The negative equity score in the state is 34.8%, almost the same as the nationwide average of 35%.
Despite the continuous flow of foreclosure condos for sale and foreclosed homes into the California market, state analysts believe that some local areas will recover faster and that the slump will not continue for the whole state at the same length of time.