Since then, fueled by what Levy terms "bizarre mortgages," home prices have ballooned to 80% more than the national average in some of these markets. The median home price in the state recent price declines, notwithstanding hovered at $586,000 as of late July, according to the latest figures from California Association of Realtors. That is more than double the national average of $228,900.This is where Levy's thoughts about affordability come into play. For many Americans, creative mortgages or not, a purchase price of a few hundred thousand dollars with a small down payment using conventional financing is a lot of money. So is the $1 million-plus to be paid for the privilege of living a few feet from neighboring homes in a tract development in many parts of the state, where housing already is considered by some observers to be in a recession, as defined by sharp drops in the level of new construction and sales activity.
A bigger economic upheaval, Levy says, "isn't about foreclosures," which are making the headlines now, "it's about the spending behavior of those who aren't going to lose homes but have seen their wealth evaporate." Either they don't have as much home equity to borrow against, he says, or they are afraid to spend as they watch the value of their home decline.