California's existing housing sales slumped 27.8 percent in April, compared to a year ago, but the median price rose 6.2 percent, in a market characterized by less action in the more affordable sector.

Tighter mortgage underwriting standards for riskier mortgages is cutting into the share of more affordable homes sold, especially in more expensive markets where prime loans remain widely available.

CAR reported 373,280 single-family detached home sales statewide in April, down from 516,960 a year ago, as prices rose from a median of $562,820 to $597,640. Condo sales were down less, 19.4 percent as prices rose 1.8 percent to a median of $439,850.

The median price is not necessarily a measure of value, but the midpoint at which an equal number of homes sold for more and for less. Over time, the median price can reflect changes in value. However, if the share of cheaper homes sold increases, the median price could fall. If the share of higher-end homes sold rises, a higher median price could result.

Apparently the latter has been happening in California in recent months. Virtually all of California's housing markets with median prices of approximately $750,000 or more revealed price increases, while more affordable markets reported smaller price increases or declines.

Except for the Santa Barbara area, CAR reported sales were down in every region over the period.

"Although the median price of a home in California continues to rise, this reflects the fall-off in sales in the lower-priced markets of the state where new home inventories and foreclosures are competing with the existing home market," said CAR Vice President and Chief Economist Leslie Appleton-Young.

"Fewer sales from these regions coupled with modest gains in some of the stronger coastal markets are pushing the median price for the state up slightly," she added.

The median price of single-family homes, in an April 2006-to-April 2007 comparison, rose 12.8 percent in Monterey County, 12 percent in Silicon Valley, 9.3 percent in the San Francisco Bay Area and 4.5 percent in Santa Cruz County. Meanwhile, prices fell 3.3 percent in Sacramento, 3.4 percent in (far) Northern California, 4.5 percent in the Central Valley, 4.7 percent in Northern Wine Country and 5.2 percent in the High Desert.

"April sales fell in part because of tighter credit standards and growing concerns about the impact of subprime loans on the market," said CAR President Colleen Badagliacco.

The Federal Reserve's April 2007 Senior Loan Officer Survey found recently that while the vast majority of senior loan officers, 85 percent, said credit standards on prime mortgages remained unchanged in the last three months, more than 56 percent said credit standards on subprime mortgages "tightened somewhat" or "tightened considerably" and 45.5 percent likewise said credit standards on nontraditional mortgages tightened considerably or somewhat in the past three months.

In the wake of turmoil in the housing market, California recently launched the Consumer Home Mortgage Information Web to help Californians make informed decisions when buying a home or dealing with troubling mortgages.

Tighter money supplies and increased foreclosures are swelling inventories in some areas, giving buyers who can land mortgages a much better negotiating position.

"Throughout the state, inventory levels have increased to their highest levels in recent years, giving buyers more time to view a greater variety of homes and sellers who set realistic prices an edge in the market," said Badagliacco, also broker/owner of RE/MAX Valley Properties in San Jose.

CAR's Unsold Inventory Index for existing, single-family detached homes in April 2007 has nearly doubled to 10 months, compared with 5.7 months in April 2006. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

In April, the median number of days it took to sell a single-family home was 53.5 days, up from 42.5 days a year ago.

Higher mortgage rates are likely to tighten the mortgage money squeeze in California. While they are lower than they were this time last year, rates are at their highest point this year.

The average fixed rate for 30-year conventional mortgages was 6.37 percent the week ending May 24 this year, compared to 6.62 percent at this time last year. In July last year, the average FRM rate peaked at 6.80 percent, according to Freddie Mac.

Published: May 30, 2007

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.