Homes sales, prices to see only slight improvement in 4th quarter
Tepid economic recovery, uncertainty holding back any sales momentum, Realtors say
California home sales and median prices are predicted to improve only slightly in 2012 as the continuation of the tepid economic recovery, uncertainty about the future, and funding challenges for residential mortgages are expected to keep the market moving sideways, with little foreseeable momentum in either direction, according to the California Association of Realtors' 2012 California Housing Market Forecast, released recently.
The forecast for California home sales next year is for a slight 1% increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.
"Despite the run of unforeseen global events in the first half of this year that slowed the overall economy, 2011 home sales are projected to essentially remain unchanged from last year," said C.A.R. President Beth L. Peerce.
"Looking ahead, the fundamentals of the housing market, such as low mortgage rates, high housing affordability, and favorable home prices, are expected to continue," she added. "But at this point, a strong housing recovery will depend on consumer confidence, job creation, and the availability and cost of home loans."
"Discretionary sellers will play a larger role in next year's housing market," said Peerce. "Those who held off selling in 2011 may list their homes in 2012, thereby improving the mix of homes for sale compared with the last few years. Additionally, distressed sales will remain an important segment of the overall market as lenders continue to work through the foreclosure process."
The California median home price will increase 1.7% in 2012 to $296,000 in 2012, according to the forecast. Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4% in 2011 to $291,000.
"2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants," said CAR Vice President and Chief Economist Leslie Appleton-Young.
"An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today's very affordable housing market," she added.
"The most likely scenario is for the modest recovery to continue, and this should push sales up slightly next year by 1% and maintain levels that are significantly higher than those recorded during the depths of the housing downturn," she explained.
"The wild cards for 2012 are many, including federal, fiscal, monetary, and housing policies; the contentious political climate during an election year; and the strength of the U.S. economic recovery," Appleton-Young said.