California Home Sales to Fall 10 Percent This Year

October 5, 2010 No Comments »


Home sales in the Golden State are expected to fall 10 percent this year before edging up slightly in 2011 thanks to a weaker-than-expected economic recovery, according to the 2011 California Housing Market Forecast from the California Association of Realtors®.

An estimated 492,000 homes will sell in California during 2010, down from 546,500 last year – and sales are slated to rise a piddly two percent to 502,000 units in 2011.

Meanwhile, the median home price in California is expected to climb 11.5 percent to $306,500 this year, and increase a further two percent in 2011 to $312,500, per the forecast.

But the previous two years saw record-setting home price declines, so the slight uptick is bittersweet at best.

“The minor improvement in the housing market next year will be driven by the slow pace of recovery in the economy and modest job growth,” said C.A.R. President Steve Goddard, in the report.

CAR expects a net jobs increase of approximately 1.4 million jobs in California during 2011 and an improvement in the unemployment numbers.

“Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role,” he added.

Homes priced under $500,000 has been driven by distressed sales, with multiple offers “very common,” while higher-priced areas of the state have been restricted by limited financing options (lack of jumbo loan financing).

The shadow inventory is expected to increase, but CAR believes banks and mortgage lenders won’t flood the market with their REO.

As far as mortgage rates go, the 30-year fixed-rate mortgage is expected to average 5.1 percent in 2011, up from 4.7 percent this year.

And the one-year adjustable-rate mortgage will climb from 3.9 percent to 4.1 percent – so you might want to refi now…

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