Why focus on California housing? Because it is a big deal - it represents some 25% of the dollar value of the US housing, or $7-8Tr.! Someone from North Carolina pointed out to me that the housing is doing great in NC, but it is no more than 1-2% of the dollar value of the US housing. A 20% drop in the price of California homes has the potential of taking the US and the world economy down with it because of the leverage, reckless lending practices, pioneered in Southern California, and the globalization of the financial system.

The most important development during the past two months is the increasing numbers of price reductions in the areas that I monitor on a regular basis. For example, during the past three months the median listing price of SFH (Single Family Homes) in Santa Clara County is down from $895K to $849k and in Santa Cruz County it is down from $820K to $799K. Most of this is due to the price reductions in the listings that existed. Another important development is very low levels of sales for the seasonally strong period. The current pending sales are at the same level, or lower, than what they were during the winter months. The most ominous sign for the future prices is the mushrooming of the inventory on the market. I will let the statistics and a case study do most of the talking.

Santa Clara County

Table 1 summarizes the deteriorating supply-demand situation. The current level of the Sales Pending is the same as during the end of November and February. While the listings are lot higher.

Santa Cruz County

Table 2 summarizes the supply-demand situation that is indicative of a dead market with very few buyers and increasing number of anxious sellers.

The situation can be best exemplified by a case study of a listing that I know of and other listing in the same development that was built during the past 6-7 years. I visited the home when it was just bought and the development had the early phase completed.

The homes from this development that are listed for sale are 1-6 years old, as per the listings. Here is a partial list of homes for sale in this development:

97 VISTA POINTE DR
33 VISTA POINTE DR
77 VISTA POINTE DR
21 VISTA POINTE DR
72 VISTA VERDE CI
92 VISTA VERDE CI
52A VISTA VERDE CI
60 MONTEREY VISTA DR
NUEVA VISTA AV
38 QUINTA VISTA ST
10 PORTA VISTA CT
316 SUNSET VISTA
308 SUNSET VISTA
4 YARRO CT
33 PELICAN DR
108 PELICAN DR
63 PASEO DR
123 PASEO DR
50 VILLA ST
18 VILLA ST
62 VILLA ST
54 VILLA ST
126 LIGHTHOUSE DR
30 LA JOLLA ST
Pima St
12 LA HACIENDA ST
39 LA HACIENDA ST

How many of the above are flippers? You can notice multiple homes for sale on some streets. There was an article is the local paper about SIGN POLUTION in the Santa Cruz area! BTW, there is plenty of land around this development for many future developments with changes in zoning. The current housing bubble was a God's gift to the developer who got the development started during the tech bubble when Scam Options money was bidding up the prices in Silly.con Valley.

Tehachapi Area

Table 4 summarizes the situation that is getting worse by the day for the anxious sellers.

Table 4: Housing Data (SFH and Condos) for Tehachapi Area
				Monthly Data
Date	Total Listings	Total Pending	Listings to Pending Ratio
				New Listings	With- drawals	Expired	In Escrow	Closed Escrow
Apr-05	208	172	1.21
Sep-05	279	121	2.31	65	41	8	41	58
Oct-05	278	114	2.44	69	46	10	33	52
Nov-05	288	102	2.82	65	22	12	45	45
Dec-05	295	73	4.04	42	23	18	24	52
Jan-06	309	72	4.29	90	28	11	32	32
Feb-06	321	75	4.28	70	23	6	45	26
Mar-06	342	92	3.72	87	19	15	58	41
Apr-06	381	85	4.48	93	23	21	41	42
May-06	439	78	5.63	108	28	9	40	38
Jun-06	470	74	6.35	127	51	21	37	41