California home prices fell year-to-year for the first time in 10 years in September. The fall came with a record month-to-month sales slump, accompanied by double-digit home price plunges largely in the south but also in the state's capital city.

Some of the state's softest markets are also areas devastated by wild fires this week and the impact is likely to show up in the months ahead as, well, a fire sale.

When the smoke is clear, the area's population will turn to recovery and rebuilding activities more so than home buying and selling.

Another major disaster, the Loma Prieta earthquake in 1989 in Northern California, likewise came at a time when other factors were already putting downward pressure on the state's housing market.

The median price of an existing single-family detached home in the Golden State in September slipped 4.7 percent to $530,830, down from the $557,150 median a year earlier, according to the California Association of Realtors (CAR).

Meanwhile, sales tanked by 38.9 percent year-to-year, falling 14.9 percent just from August to September, the largest month-to-month decline on record.

The association said while seasonal factors typically impact the market right about now, the mortgage market crunch was largely to blame. California's high cost of housing in a tight money market and soft economy also come into play.

Areas scorched by wildfires were among those hit hardest by year-to-year sales and home price declines. With sales declines first, followed by price declines, the Riverside/San Bernardino area's numbers were down 47.7 percent and 12.5 percent; Orange County, 32.9 percent and 4.6 percent; San Diego, 36.4 and 5.6 percent: and the Los Angeles metro area down 38.4 and 2.8 percent.

The greatest sales and price declines, however, were in the High Desert region further east of the scorched earth where sales crashed by 62.7 percent and prices dove by 17.4 percent.

A double-digit home price decline also hit Sacramento, one of the state's first metro areas to feel the downturn. Sacramento home prices were down nearly 12 percent as sales tanked by 38.9 percent.

Sales were down by at least 27 percent in every major metro in the state. Prices fell in 14 of the 19 areas tracked.

However, even as sales slumped by 39.3 percent in Santa Clara County (Silicon Valley) the median price of homes moved ahead of last year's prices by 10.4 percent buoyed largely by sales in the upper end of the market.

Other than the posh Santa Barbara South Coast where the statistically insignificant number of homes sold pushed prices up 55 percent over the year, only Santa Barbara County, Palm Springs/Lower Desert and Monterey County, in addition to Silicon Valley, enjoyed home prices increases -- but not by more than 1.5 percent.

Even less expensive, but still often unaffordable condos were hit. For the year ending in September, condo sales were down 38.9 percent and prices dropped 4.6 percent.

The falling sales and prices don't yet reflect the impact of the ring of fire in Southern California which had not flared up when the numbers were tallied.

The coming months are likely to tell a different story as current residents rebuild and those thinking about buying in the area, already put off by the high cost of housing and finance hurdles, will think twice about buying in the drought-stricken, fire-prone region -- at least for a while.

The post-disaster potential of higher homeowners insurance premiums, scarcer coverage or both, the potential for tougher, more fire-resistant building codes even possible limitations on further development in certain remote, arid locales are among other concerns that could plague home buying in some California areas.

Right now, the fundamentals apply.

"California's sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans – those above the conforming loan limit of $417,000," said CAR president Colleen Badagliacco.

"This speaks to the need to raise the conforming loan limit in higher-cost states like California to more accurately reflect the cost of housing," added Badagliacco, also co broker-owner of RE/MAX Valley Properties in San Jose.

Published: October 29, 2007

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.