California home sales are expected to edge up slightly in 2011
CALIFORNIA ASSOCIATION OF REALTORS® releases itsCalifornia Housing Market Forecast for 2011:
Small increases projected in bothhome sales and median home price
LOS ANGELES (Oct. 4) – A weaker-than-expectedeconomic recovery will result in a projected decline in California home salesfor 2010, although home sales are expected to edge up slightly in 2011,according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) “2011 CaliforniaHousing Market Forecast” released today.
California home sales for 2010 are forecast todecline 10 percent from the 2009 sales figure of 546,500 homes sold. Sales in 2011 are projected to increase a lackluster 2 percent to 502,000 unitscompared with 492,000 units (projected) in 2010. After two consecutiveyears of record-setting price declines, the median home price in Californiawill climb 11.5 percent in 2010 to $306,500 and increase another 2 percent in2011 to $312,500, according to the forecast.
“California’s housing market will see smallincreases in both home sales and the median price in 2011 as the housing marketand general economy struggle to find their sea legs,” said C.A.R. PresidentSteve Goddard. “The minor improvement in the housing market next yearwill be driven by the slow pace of recovery in the economy and modest jobgrowth. Distressed properties will figure prominently in the market nextyear, but we also expect to see discretionary sellers play a larger role,” hesaid.
“As the U.S. economy continues its tepid recovery,we’ll see some improvement in California’s economy,” said C.A.R. Vice Presidentand Chief Economist Leslie Appleton-Young. “We expect a net jobs increaseof approximately 1.4 million jobs in California for the year to come and animprovement in unemployment figures,” she said.
“The situation in the California housing marketcontinues to be a tale of two housing markets,” said Goddard. The segment ofthe market under $500,000 has been driven by distressed sales, while higher-pricedareas of the state have been constrained by restricted financing options, andincreasingly have experienced an increase in the number of distressedproperties. Sales in the low end have been constrained by a lack ofinventory, putting upward pressure on prices. Multiple offers onlower-end homes have been very common, according to Goddard.
“A lean supply of available homes for sale willdrive prices up at the low end, but larger inventories and limited, lessattractive financing will cause continued softness at the high end,” saidAppleton-Young. “There’s some indication that lenders will accelerate thenumber of foreclosures coming on market, further adding to the housing supply,but we do not anticipate that lenders will flood the market with distressedproperties,” she said.
“The wild cards for 2011 include federal housingpolicies, actions of underwater homeowners, and the strength of the economicrecovery,” said Appleton-Young. “What is certain is that favorable homeprices and historically low interest rates will continue to make owning a homein California attractive for those who are in a position to buy,” she said.