CA Realtors forecast slight rise in home sales for 2011

Great article in the paper today:


The California Association of Realtors expects the state's existing home sales market to end 2010 on a down note, with only modest improvement next year.

By the close of this year, sales of existing single-family homes will have declined 10 percent compared with 2009, CAR predicted Monday in its 2011 California Housing Market Forecast. Los Angeles-based CAR forecast only a 2 percent gain in 2011.

CAR projected 2010 sales statewide to come in at 492,000, compared with 546,500 in 2009. It forecast 502,000 sales in 2011.

CAR also predicted an increase in median home sale prices. After two consecutive years of record price declines, CAR said the median home price in California will climb 11.5 percent to $306,500 for 2010, and increase another 2 percent in 2011 to $312,500.

"As the U.S. economy continues its tepid recovery, we'll see some improvement in California's economy," said CAR Chief Economist Leslie Appleton-Young. "We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and an improvement in unemployment figures."

Kris Vogt, president of the Coldwell Banker Residential Brokerage's Sacramento-Tahoe regional office, said he also was cautiously optimistic about 2011.

"I think the fact that we finally have a state budget might help with some confidence, along with low interest rates and (home) affordability at historic levels," Vogt said. "I think these are things consumers can really step into, and that will be good for 2011."

Even so, 2011 projections fall far short of pre-recession totals. In 2005, for example, statewide sales of existing homes totaled 625,000, with a median price of $522,700.

CAR President Steve Goddard believes troubled properties will play a role in helping the market climb out of the hole in 2011.

"Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role," he said, adding later, "The segment of the market under $500,000 has been driven by distressed sales, while higher-priced areas of the state have been constrained by restricted financing options."

"A lean supply of available homes for sale will drive prices up at the low end," Appleton-Young noted.

"But larger inventories and limited, less-attractive financing will cause continued softness at the high end. … The wild cards for 2011 include federal housing policies, actions of underwater homeowners and the strength of the economic recovery."