With the median price of Southern California homes down more than 40% from its peak, the housing market has now slid further than most economists expected.
The median sales price for homes in the region fell to $300,000 in October, a level not seen since 2003 and a 41% drop from the peak price set in the spring and summer of 2007, according to San Diego-based MDA DataQuick.
Los Angeles County's median home sales price was $355,000, down 29% from a year ago.
Prices were dragged down by the large number of foreclosed homes on the market. For the first time since the slump began, repossessed properties in October accounted for more than half of residences sold.
Low prices did drive sales up 56% from a year ago. But a market bottom remains elusive, and a rebound in prices is not on the horizon.
Unemployment is rising and consumer spending has slowed, adding another dimension to the crisis and making it even harder to find a light at the end of the tunnel.
Just a year ago, several market analysts interviewed by The Times predicted that Southern California home prices would drop 15% to 25% from their peak.
It took only until July for the median price to fall 25% below its 2007 peak of $505,000, and it has kept falling since.
Barring a dramatic economic reversal, the median sales price is on track to slip below $300,000 when November sales are calculated next month.
Thomas Davidoff, a UC Berkeley economist, said he and others underestimated the drop in value because it was tougher a year ago to know just how many people had mortgaged their homes for more than they could really afford.
Those earlier forecasts proved off because "it was hard for people to get their arms around just how bad lending standards had gotten," Davidoff said.
During the real estate bubble, banks and brokers offered mortgages that required little or no money down, minimal proof of income and "teaser" mortgage rates that lowered initial monthly payments but later jumped to a much higher rate.
Last year, it was unclear how many of those loans would default. But much of that mystery has been solved by now, as massive numbers of homes have been repossessed.
In October 2007, 16% of the homes sold in Southern California had been foreclosed, compared with 51% last month. Mounting foreclosures flooded the market with discounted repossessed homes, further depressing home values.
