Is California nearing a housing bottom?

Although we've continued to hear noises that various areas of the state are showing declining levels of inventory as prices decline and buyers venture back into the market, more recently there are signs that the state -- which was among the first to enter the real estate downturn -- could be hitting bottom sooner than other states. From a BusinessWeek story:

First-time home buyers and investors are jumping to take advantage of state and federal tax incentives, low interest rates, and prices that are more affordable than they have been in many years. California's median home price climbed in April on a monthly basis for the second straight month. That hasn't happened since August 2007, the California Association of Realtors reported on May 28. Home sales in April rose 49% compared with April 2008.

The most promising sign of stabilization is the strikingly low inventory of unsold homes—well below the historical average. It would now take 4.6 months to deplete the state's supply of unsold houses at the current sales pace. Supply was as high as 16.6 months in January 2008, and the long-term average for the state is about seven months.

The median price for a single-family home in California was $256,700 in April, down 36.5% from a year earlier but 1.4% higher than the previous month, according to the California Association of Realtors. Other states aren't faring as well. Inventory levels in Arizona and Nevada remain high. And Florida's supply of unsold homes is two or three times normal levels...

Despite the positive signs, California faces a bumpy road to recovery. Unemployment is still rising, foreclosures are e xpected to accelerate in coming months, and the luxury market is weak not only because jumbo loans are expensive and difficult to get approved but also because few buyers are willing or able to take a risk on pricey properties. Even the California Association of Realtors—which is saying prices are likely close to the bottom—expects some additional pressure on prices as tens of thousands of foreclosed properties enter the market later this year...

San Diego, which was one of the first bubble markets to burst, now is one of the tightest markets in the state. It had only a three-month supply of unsold homes in April, according to the California Association of Realtors, which ranked California counties for BusinessWeek.com, based on the tightest inventory levels. Other tight markets include Sacramento County and Riverside/San Bernardino counties (in Southern California's Inland Empire), which also have less than four months of inventory...

California has some advantages over other states that were also ravaged by the housing slump. Construction in the state's coastal areas was fairly limited during the boom and—unlike Florida and Nevada—builders focused on single-family homes rather than condos, resulting in fewer new housing units. And California, despite its economic problems, has a diverse job market, natural beauty, top schools, cultural depth, and great weather.

Moreover, in March the state also began offering a $10,000 tax credit for buyers of new homes. That's in addition to the federal government's $8,000 credit for first-time buyers...

"Top Schools?"