California home sales and the median price of homes statewide 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 “2012 California Housing Market Forecast” published by the California Association of Realtors (CAR).
The forecast for California home sales next year is for a slight one percent 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 CAR 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, but at this point, a strong housing recovery will depend on consumer confidence, job creation, and the availability and cost of home loans.”
The California median home price will increase 1.7 percent 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 four percent in 2011 to $291,000.
“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.”
CAR VP and Chief Economist Leslie Appleton-Young said, “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. 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. The most likely scenario is for the modest recovery to continue, and this should push sales up slightly next year by one percent and maintain levels that are significantly higher than those recorded during the depths of the housing downturn.”
