In this second part, let’s take a look at condo market. The two graphs below show the median price and months of inventory of all condos.
The median price culminated in spring, thanks to the federal and state first time home buyer credits. Then it quickly cooled down in summer and stayed low through the rest of year. The market struggled to absorb the inventory coming up in summer. As very few homes coming on to the market, listings are either sold, pulled off the market or, in case of short sales, taken by the banks. The condo market is supported by first time home buyers and investors. The demand from investors is solid, constituting 25% of all condo buys in California. That means the demand of first time home buyers are very weak now, despite affordability being at all time high. The answer really comes to one: credit. With Fannie Mae and Freddic Mac tightening the credit score requirements and the requirements of 20% down payment, first time home buyers are seeing more road blocks than ever.