Following on the heels of a 10% decline in home sales this year, California should see improvement in its real estate market in 2011, according to the California Association of Realtors.
Sales in 2011 are projected to increase 2% to 502,000 units, compared with 492,000 units (projected) in 2010, according to the 2011 California Housing Market Forecast.
After two consecutive years of record-setting price declines, the median home price in California will climb 11.5% in 2010 to $306,500 and increase another 2% in 2011 to $312,500, according to the forecast.
“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 Steve Goddard, California Association of Realtors president. “Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role.”
“The situation in California … continues to be a tale of two housing markets,” Goddard said. The segment of the market under $500,000 has been driven by distressed sales, he explained, while higher-priced areas of the state have been constrained by restricted financing options and an increase in the number of distressed properties. Sales in the low end have been constrained by a lack of inventory, putting upward pressure on prices. Multiple offers on lower-end homes have been very common, according to Goddard.
The association’s chief economist, Leslie Appleton-Young, said: “A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited, less attractive financing will cause continued softness at the high end. There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties.”