Estate and mortgageCalifornia Gold To Lose Glitter In 2008
The California Association of Realtors (CAR) says the median home price in California will decline 4 percent to $553,000 next year compared with a projected median of $576,000 this year, for the first home price decline since 1996.
Sales for 2008 should decrease 9 percent to 334,500 units, compared with 367,500 units projected for 2007.
The last time the sales level fell below 2007’s projected 367,500 units was in 1995, when annual sales totaled 342,540 units. Sales last fell below 2008’s 334,500-unit forecast in 1985, with 328,270 units.
The last time the statewide median price fell was a 0.5 percent decline in 1996. The most recent statewide median price decline greater than 4 percent was a 4.5 percent decline in 1993.
CAR economists also forecast a 23 percent decline in sales this year to 367,500 units compared with 2006. CAR also predicts a 3.5 percent increase in the statewide median price to $576,000, an upward revision from the forecast of a year ago predicting a 2 percent drop in home prices for 2007. The more bullish prediction on home prices this year reveals California"s inherent market strength.
The state"s ongoing housing shortage and demand from immigrants and technology and higher-income workers has kept the upward pressure on prices even as the mortgage market morass worked to push prices down.
CAR concedes, the projected increase in the 2007 statewide median stands in contrast to the situation in most counties, regions, and communities of the state, where slight to modest year-to-year percentage declines have become more prevalent and are expected to continue next year.
The statewide condo median price was down 3.1 percent in August compared to August a year ago, while single-family home prices remained 2 percent above last year"s median in August.
Sacramento"s home prices sank 12 percent in August 2007, compared to August last year, the biggest drop in the state for a major metro. The North Santa Barbara County market"s prices fell 13.8 percent and the High Desert region saw a 13.7 slip in median prices, followed by an 11.5 percent drop in the Central Valley; a 7.4 percent decline in the Riverside/San Bernardino region and a 6.6 percent decline in Northern California.
Other major metros, including, Los Angeles, Monterey, Santa Cruz, San Francisco Bay, and Santa Clara counties continued to enjoy median home prices increases, but often due to a larger percentage of home sales in high end price categories.
But that"s likely to change next year, according to a new index from the Chicago Mercantile Exchange where housing futures, paint a grim outlook for home prices in the Golden State.
Along with Miami and Las Vegas metros, traders are betting metros that will endure the greatest home price declines in the coming years include San Francisco and San Diego, which has already revealed weakness. Home prices in San Diego were down 0.6 percent in August, compared to a year ago according to CAR.
Like much of the rest of the nation"s housing market, the writing"s on the wall for California.
"Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year," said CAR president Colleen Badagliacco, a broker with RE/MAX valley properties in San Jose.
"Now is not the time for homeowners to "test the waters" -- only serious sellers should put their homes on the market in what will continue to be a challenging sales environment," Badagliacco said.