Home Brokers in California Predict Rise in Home Price
October 9th, 2009Home brokers in California have predicted that the median home sales price will increase by 3.3 percent and that overall home sales will fall by 2.3 percent in 2010.
California brokers released their sales and price forecasts as their group California Association of Realtors held its annual conference this week in San Jose.
According to the brokers, total sales of pre-owned single-family houses will fall from 540,000 units this year to 527,500 units in 2010. The median price will increase to $280,000.
Sales of homes reached their highest level in 2004 when a total of 625,000 units were sold and fell to their lowest level in 2007 when only 346,000 units were sold. The median home sales price reached its peak in 2007 when it hit $560,300 and then sharply declined as the downturn began. This year, the median home sales price has gone down by over 50 percent to around $271,000.
Leslie Appleton-Young, chief economist of the association, said the year 2010 will be characterized by sales of low-priced foreclosed homes to investors and first-time home buyers and sales of high-cost homes at lower prices. She predicted that many owners of higher-priced homes will be forced to sell their homes because of job loss.
In addition, home brokers also said that many owners of higher-cost homes are not be able to modify or refinance their loans because of the reluctance of banks to provide jumbo loans at a time when the employment picture is dark.
Appleton-Young said that although there are slight differences among individual housing markets in California, the city of San Diego reflects the same economic conditions in other cities. Inland properties are falling in values while properties along the coast are being abandoned because of job losses and reductions in income, she added.
Nonetheless, Appleton-Young mentioned that there several positives in the San Diego market. She said that although San Diego has some areas where foreclosures are soaring, the demand for foreclosures is strong and that home affordability is being pushed up. She remarked that the higher end of the San Diego housing market is weak because many sellers are not yet willing to reduce their prices.
Appleton-Young also expressed confidence that the federal tax credit will be extended beyond its November expiration date. In a survey of home brokers conducted by the association, 40 percent said their buyers made their home purchases because of the federal tax incentive.
