Southern California median prices now down more than 40% -- what a difference a year makes

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Southern California median sales prices are now down more than 40% from their peak. They’re on the verge of falling beneath $300,000. Foreclosures make up more than half the homes sold in the region.

The latest figures are probably of little surprise to anyone these days.

But just a year ago it was a matter of some controversy when several economists interviewed by the Times predicted prices would fall 15% to 25% from their peak levels. For a lot of market watchers, those predictions seemed frightening at the time.

Many of the 86 commenters on this blog, however, correctly predicted the forecasts were underestimating the potential drop.

Perhaps a greater number of real estate industry people wrote me angry notes saying the predictions were irresponsible, or berating me for playing up ‘negative’ information.

Shortly after that story ran, economist Christopher Thornberg adjusted his prediction to a 40% drop from the peak (this was well before the 25% drop he earlier predicted had been achieved). He’s now tweaked it again to a 55% drop from the peak.

That predicted 25% drop doesn’t seem so bad any more, now does it?

-- Peter Y. Hong