Home Brokers in California Predict Price Increase in 2010
Home brokers in California have predicted that home prices will increase slightly next year and that the statewide housing market will continue to be characterized by strong sales in the low-cost sector of the market and weak sales in the high-cost sector.
According to brokers who attended a conference of the California Association of Realtors in San Jose this week, the median price for a previously owned single family-house will increase to $280,000 next year, an increase of 3.3 percent from the projected median of $271,000 for this year.
Home sales, meanwhile, are predicted to drop to 527,000 next year, a decrease of 2.3 percent from the projected home sales of 540,000 for the current year.
The projected increase in home prices next year follows two consecutive years of sharp price declines – more than 38 percent of price drop in 2008 and the projected price drop of nearly 22 percent this year. The projected home sales increase of nearly 23 percent this year follows the 26.8-percent home sales increase last year.
James Liptak, who leads the California home brokers, said that the statewide housing market is now defined by two market sectors which are performing differently. He explained that the low end has been attracting investors and first time home buyers while the high end is facing difficulty because of the lack of financing and uncertainties about the direction of prices.
Another major reason for the weakness in the higher end of the market is the disappearance of move-up buyers, according to Mark Hanson of property research firm Field Check Group. He said that move-up buyers cannot sell their properties at a price that would enable them to buy a higher-priced home.
Hanson also predicted that home sales at the lower end of the market will drop because of the drop in inventory. But he added that the inventory will grow if redefaults increase and if loan modifications and other foreclosure programs fail.
Meanwhile, Dave Stark, explained that activity in the housing market next year will depend on the availability of home loans. He explained that home price reductions are in part caused by tougher access to home financing. Stark, director for public affairs for an association of home brokers in Alameda County, also added that demand and supply will still be the main factors in determining how the California market turns out next year.
