Quick Takes: The Big “R’, California Dreaming

The latest survey shows that 71% of economists believe that the U.S. economy has slipped into recession. Commerce Department shows a deep drop in retail sales in February with an associated drop in consumer confidence. The situation has only continued to deteriorate in March, with faltering payrolls and increasing unemployment demonstrating that the economy has continued to contract.

As a backdrop to this news, the real estate situation in California has continued its decline with no improvement in sight. The median prices continued to drop across the state with Southern California leading with a slide of 17.9%. This does not mean that the Silicon Valley area fared much better; in the nine counties of the San Francisco Bay Area, the median price fell 11.6 percent. Home sales volume continues to hit record lows.

So much for “California Dreaming” - The entire situation is a harsh lesson to many home-owners who thought that housing prices only go up, or that the maximum downside could never be more than 10%. The entire region is likely to see housing price drops of nearly 30% before the end of 2008.

Home prices plunge across California