People optimistic about economy

Californians are feeling better about the economy than they were a few months ago, but they continue to hold back on big-ticket spending, according to a recent survey by Chapman University.

Road to Recovery: Local Housing Market Shows Signs of Strength

The median price of existing single-family homes in California in May was $324,430, a 23.2 percent increase compared with a median price of $263,440 in May 2009. The May 2010 median price increased 5.9 percent compared with April’s $306,230 median price.

While home prices are rising month-over-month and year-over-year, affordability continues to remain at near-record highs. In the first quarter of 2010, 66 percent of first-time home buyers in California could afford to purchase an entry-level home in the state.

Many first-time home buyers in California timed the opening and closing of escrow to capitalize on both the federal and state tax credits, helping propel home sales in May.

Percentage of homes with price reductions declines in June

A new report found 22 percent of homes listed for sale nationwide experienced at least one price reduction as of June 1 compared with 23.6 percent in June 2009, according to Trulia.com. The average discount for price-reduced homes remained unchanged at 10 percent of the listing price.

Cities in the Western U.S. experienced the largest decreases in price reductions compared with the previous year. Las Vegas led the way with a 67 percent decrease and six California cities (Oakland, San Jose, Los Angeles, Sacramento, San Francisco, and San Diego) experienced a price reduction of 24 percent or more, according to the report.

Price reduction levels for luxury homes--those listed at $2 million and higher--continued to hold steady with 21 percent of homes experiencing a price reduction and an average reduction of 14 percent off the listing price.