Event Coverage

Housing is Rebounding

In the last 12 months, unprecedented action by the federal government has pumped $3 trillion into the economy. These direct expenditures in the form of programs and incentives, such as the first-time homebuyers tax credit, Cash for Clunkers program, extension of unemployment benefits and tax cuts to consumers are working, and as a result, the housing market is slowly recovering, according to Leslie Appleton-Young, vice president and chief economist of the California Association of REALTORS®.

"As deep as this downturn has been, we're actually coming out of it," Appleton-Young told REALTORS® from across the state, who gathered at the San Jose Convention Center this week.

Appleton-Young presented C.A.R.'s 2010 Housing Market Forecast at the CALIFORNIA REALTOR® EXPO 2009 on Wednesday. The forecast included an historical overview of the housing market; a synopsis of the current financial situation and its impact on the housing market; and a preview of what consumers and the real estate industry can expect for California's housing market in 2010.

Although the news is good, Appleton-Young was cautious with her analysis and forecast.
"We are still in a recessionary environment," Appleton-Young stated.

Consumers are still hesitant about spending. "Either they won't or they can't get into the mode of spending," Appleton-Young said, noting to-date, despite stock market gains in the third quarter, the savings rate of consumers is pushing 5 percent, the highest it's been in years.

An even graver problem is the jobless rate which, if not resolved, will hurt the housing recovery. California has been hit harder than most states, having lost 740,000 jobs between August 2008 and August 2009. The state's August unemployment rate reached 12.2 percent. The housing and consumer goods industries have been impacted most. Appleton-Young indicated this year new housing is down almost 50 percent.

"We're not building enough to meet the demographic demand," she remarked.

Appleton-Young said it may not feel like a recovery because the dollar volume of sales has dropped and the mix of what's selling has changed dramatically. However, she pointed to the stabilization of distressed markets like the Central Valley and Solano County, which are seeing a shortage of foreclosure properties to sell due to multiple offers and cash offered by investors. These markets are now seeing their median home prices increasing. Markets are rebounding, she said, with Santa Clara County displaying the strongest sales.

Appleton-Young said California is a diverse real estate market and in many cases, it's "a tale of two markets." She explained two neighboring counties will tell a different story in median price, as well as distressed sales. The same is true among different neighborhoods within a county.

"So the local data is important to you and your clients. Read the story for a particular area," she told REALTORS®.

C.A.R.'s chief economist tied future growth and a complete economic recovery to continuation of the government's stimulus spending and incentives - particularly the extension of the home buyer tax credit; job creation; taking care of the country's growing deficit; and warding off inflation, which she says is certain to be a problem down the road.

Silicon Valley Association of REALTORS® Region 9 Chair Mark Burns said Appleton-Young's forecast was better than he anticipated. He said he was pleased to hear that the Santa Clara County housing market is doing well compared to other parts of the state.

"While some markets have had to face a 20 to 50 percent price adjustment, the 10 to 15 percent price adjustments some neighborhoods in our region have had to face speaks of the strength and quality of the region," Burns said. "We have excellent location, weather, employment, schools, health services and other great facilities in Silicon Valley. Families derive great value living in our region."

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The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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