California House Prices Forecast to Rise in 2010, Realtors say

This week, the CALIFORNIA ASSOCIATION OF REALTORS® released its annual housing forecast. C.A.R.’s annual housing forecast details what consumers, REALTORS®, and the real estate industry can expect to happen next year in terms of median prices and existing home sales. C.A.R.’s forecast is closely followed by the news media, and the Association’s leadership and economists often are called upon to discuss the forecast. This year, coverage by the news media produced nearly 200 newspaper articles, Web stories, and blog entries, in addition to extensive television and radio coverage. The 2010 California Housing Market Forecast was presented Wednesday at CALIFORNIA REALTOR® EXPO 2009 in San Jose.

MAKING SENSE OF THE STORY FOR CONSUMERS

· The median home price in California is expected to rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to the forecast. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

· “After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” said C.A.R. President James Liptak. “2010 will mark the beginning of the ‘new normal’ for California’s housing market. This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

· “Housing in California has become a tale of two markets,” Liptak said. “The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of home buyers to secure financing as well as their concerns about where prices are headed. While demand from first-time buyers for low-end properties will continue throughout next year, sales could be impacted if discretionary sellers do not return to the market by the second half of 2010.”

· “Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier than expected wave of foreclosures come to market next year,” said Leslie Appleton-Young, Vice President and Chief Economist for the CALIFORNIA ASSOCIATION OF REALTORS®. “The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government.”

Source: Bloomberg