California's housing market currently shows signs of fragility, similar to the downturns experienced in the 1990s, which were spawned by changes in lending support and international economic conditions. The decline began after the 1980s, culminating in a period where home prices stagnated for nearly eight years, with the median price in 1991 recorded at $211,000, only to rise slightly to $212,300 by 1999. Additionally, a reduction in defense spending following the Cold War severely affected California's job market, particularly in manufacturing sectors reliant on defense contracts.
In May 1991, the statewide median sales price of a single-family home hit a record $211,000. It would take almost eight years for a new record to be set at $212,300 in March 1999. That's zero appreciation over almost eight years. Zero.
The end of the Cold War with the Soviet Union translated domestically to dramatically less defense spending in the 1990s. That slashed jobs in the previously flourishing manufacturing sector, especially the aerospace firms in California.
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