The California Association of Realtors is projecting modest increases in home sales and median prices next year, with the weaker-than-expected economic recovery not producing enough job growth to fuel a more dramatic rebound.
CAR Chief Economist Leslie Appleton-Young expects resales of single-family homes, which bottomed in 2007 at 346,900, to grow by 2 percent next year, reaching the 502,000 mark. After registering double-digit growth in 2008 and 2009, home sales will probably end up shrinking by 10 percent this year, to 492,000, CAR projects.
After bottoming last year at $275,000 after two consecutive years of record-setting declines, Appleton-Young projects the median home price in California will climb 11.5 percent in 2010 to $306,500, and increase another 2 percent in 2011 to $312,500.
CAR said the state’s housing market remains bifurcated, with the market for homes priced under $500,000 driven by sales of distressed properties. A lack of inventory of homes on the low end has constrained sales and put upward pressure on prices, with multiple offers very common, CAR said.
In higher-priced areas, sales have been constrained by restricted financing options, and distressed properties are showing up in greater numbers.
"A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited, less attractive financing will cause continued softness at the high end," Appleton-Young said in a press release.
"There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties."
CAR expects a net jobs increase of approximately 1.4 million jobs in California in 2011. Wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of the economic recovery, Appleton-Young said.
CAR’s 2011 forecast projects that the state’s median home price will remain more than 40 percent off the 2007 peak, and that rates on 30-year fixed-rate mortgages will average 5.1 percent in 2011. Appleton-Young said those factors "will continue to make owning a home in California attractive for those who are in a position to buy."