Home prices continue sharp descent

The West has seen a sharp drop in home prices.

In the first quarter the U.S. real state market has seen a 7.7% decline in home prices. This is the largest year to year decline since 1982.

The median selling price is $196,300 now. This is a decline of 4.8% in comparison to 2007.

 Due to the liquidity problems, the high prices markets are showing decline in the sales as well as sales price. Such declining markets have affected other markets. The shortage of jumbo loans also affected the sale of homes. Sales slowdown has resulted in lower value of the homes.

Jumbo mortgage (more than $417,000) helped in buying 40% of the Californian homes. This was the case during 2007. Now, the same mortgage is involved in 10% of the total sales in California. Freddie Mac and Fannie Mae increased the cap value up to $729,750 from $417,000. But the rates of these conforming jumbos are always higher than ordinary mortgage rates. The rate is 1% and 1.5% higher than ordinary mortgage at any time. Such higher mortgage rates discourage investors from using them to buy a home.

Many of the U.S. real estate markets were hit by the sub prime crisis. Low priced houses become more prevalent in the market, which actually brought down the NAR median home prices.

So subprime mortgages along with high prices bogged down the U.S. hose prices. Some of the facts about the home prices

California, Sacramento down 29.2% to $258,500

Riverside down 27.7% to $287,100.

Las Vegas down 20.2% to $247,600 and

Phoenix down 15.4% to $222,200.