California's rollercoaster ride to end?
CAR: Different tracks for low-end, high-end homes
By Inman News, Wednesday, October 7, 2009.
Flickr photo by _PaulS_.The up-and-down rollercoaster ride that California home sales and prices have been on for the last several years could finally even out in 2010, although the state will continue to have a bifurcated housing market, the California Association of Realtors said today.
The "new normal" for California housing markets -- brisk sales and lean inventory on the low end, coupled with continued roadblocks to closing deals on the high end -- could produce a slight increase in the state's median home price, even as sales cool down a bit, CAR said.
In its 2010 forecast, CAR projects the state's median home price will rise 3.3 percent next year to $280,000, even though sales of existing homes are expected to decrease by 2.3 percent, to 527,500 units.
After double-digit declines in sales in 2006 and 2007 -- followed by double-digit increases in 2008 and 2009 -- CAR sees sales moderating to "a more sustainable pace" in 2010.
During the boom, sales of existing homes peaked at 625,000 in 2004 and 2005, and bottomed out at 346,900 in 2007. The median home price has also been on a rollercoaster ride, peaking at $560,300 in 2007 and falling to a projected $271,000 this year.
"Housing in California has become a tale of two markets," CAR President James Liptak said in a press release. "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 homebuyers to secure financing as well as their concerns about where prices are headed."
CAR expects demand for low-end properties from first-time buyers will continue throughout next year, but it remains to be seen whether discretionary sellers return to the market by the second half of 2010, the group said. ...CONTINUED
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Submitted by Jon Astaris on October 7, 2009 - 11:56am.
"'The wild cards for 2010 include foreclosures, loan resets, the labor market, the California budget crisis, and the actions of the federal government,' Appleton-Young said."
We could add here The Big One, terrorist action(s), aggressive wooing by neighboring states, etc.
The deck contains nothing but wild cards, yet the card readers did their predictable predictions as if all will be well and Inman cheerfully prints them as worthy news. Someone here's not playing with a full deck.
Submitted by Alexis Eldorrado on October 7, 2009 - 12:09pm.
I think any positive news that can be reported, should be. Inman should report the pluses of the marketplace even though there are wildcards that are all undeterminable at this point.
At least, at least in the Chicago real estate market, that other than price point, seems to be following a similar pattern, there is some continuity and consistency with the way the banks are handling the REOoffers and short sales. Up until a few months ago, it was still like the Wild West. Anything did or did not go based upon the sheer volume of numbers and no one knowing exactly how the banks were responding to offers.
The more consistent and responsive the banks are with accepting offers on distressed properties, the less inventory, shorter absorption rate, and at least some semblance back to a healthy market place.
In terms of the $8000 credit being extended, it would be counter-productive for the government to announce that too soon or you would shut down the frantic current momentum that is driving this arena of the market now.
Alexis Eldorrado
Managing Broker
Eldorrado Chicago Real Estate LLC
150 N. Michigan Avenue, Suite 2800
Chicago, IL 60601
773-588-7777
Alexis@Eldorrado.com
www.Eldorrado.com
Submitted by Kris & Kim Darney on October 7, 2009 - 12:50pm.
"Liar, Liar Pant's on Fire!"
I am not surprised by this response from CAR. I am not a member of CAR for this very reason. CAR has been touting this resurgence of home prices every chance they get. Their lockstep with NAR that is currently running a television ad boasting increased home values. This may be true for Indiana, but what about CA, NY, AZ, FL...where most of the US population resides?
What CAR is failing to do is act ethically. Their predictions are poor attempts to spin reality. What CAR needs to do is tell the truth.
Shadow inventory of homes held by dishonest banks is enough to lay this CAR spin to rest. Expectations of Shadow inventory top 7,000,000 nationwide. Approximately 1/3 of these are in California. If they hit the market tomorrow, today's $450,000 homes would be selling for $50,000 or less.
In San Bernardino County alone there are approximately 150 notices of defaults (nod's) hitting the market every day or 39,000+ this year alone.
These numbers are staggering. CAR's "mumbo jumbo" card tricks can't hide that reality.
I predict that home prices will drop another 15 to 20% over the next year. This is real based on the amount of inventory available on the MLS today. In most cases, the lower priced homes are selling...but the homes $450,000+ are sitting. The inventory is growing for these homes...daily. In many areas of California, their are 2 years...24 months of housing inventory in MLS listed as ACTIVE...no offers.
CAR. step up and do the right thing and be honest.
Kris Darney
DRE#01464957
Submitted by michael Espiritu on October 7, 2009 - 3:57pm.
I agree with Kris. If all the inventory that should have been foreclosed on was released the prices would plummet. CAR is notorious for wrong predictions.
What about the people that have lost 65% of their home's value??? These people will walk away and rent for three years and buy again later.
What about the 5-year ARM's that will be resetting in 2010 and 2011???
Optimisim is great but being untruthful is just wrong!
In California the unemployment rate continues to skyrocket. The reason that we have brisk sales is due to low prices and low interest rates. I am not an economist but there are very few signs, if any , that we are out of the out of the recession.
CAR needs to get real and yes I am a member of CAR!!!
Michael Espiritu
Broker
Elite Realty Group
SoCal