SILVAR  :  Newsroom  : Real Estate Articles

Real Estate Articles

C.A.R. Forecasts Small Increases in Home Sales and Median Price for 2011

Wednesday, October 6, 2010

Due to a weak economic recovery, California home sales for 2010 will most likely decline, but home sales are expected to pick up slightly in 2011, according to the California Association of REALTORS®' "2011 California Housing Market Forecast."

C.A.R.'s forecast was released last week and states California home sales for 2010 are expected to decline 10 percent from the 2009 sales figure of 546,500 homes sold. Home sales in 2011 are then projected to increase slightly by 2 percent to 502,000 units compared with a projected 492,000 units in 2010. After two consecutive years of record-setting price declines, the median home price in California is projected to climb 11.5 percent this year to $306,500, and then increase another 2 percent in 2011 to $312,500.

The report indicates minor improvement in the housing market in 2011 will be driven by the slow pace of recovery in the economy and modest job growth. Realtor officials are positive about next year's market, but continue to note the movement back to a vibrant housing market will take time.

"As the U.S. economy continues its tepid recovery, we'll see some improvement in California's economy," said California Association of REALTORS® Vice President and Chief Economist Leslie Appleton-Young. "We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and an improvement in unemployment figures."

C.A.R. President Steve Goddard said distressed properties will most likely figure prominently in the market next year. Discretionary sellers are also expected to play a larger role.

"The situation in the California housing market continues to be a tale of two housing markets," said Goddard.

Goddard explained the segment of the market under $500,000 has been driven by distressed sales, while higher-priced areas of the state have been constrained by restricted financing options, and increasingly have experienced 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.

"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," said Appleton-Young. "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."

"The wild cards for 2011 include federal housing policies, actions of underwater homeowners and the strength of the economic recovery," said Appleton-Young. "What is certain is that favorable home prices and historically low interest rates will continue to make owning a home in California attractive for those who are in a position to buy."

The state housing market forecast is realistic, said Jeff Bell, president of the Silicon Valley Association of Realtors. "Given the drastic housing market downturn which crippled some areas more than others, it is reasonable to expect it will take time for the market to get back on its feet again. There are positive trends, but a full recovery will hinge on public confidence, loosening of the jumbo market and strengthening of the job market."

Bell said the Obama administration's move to extend through 2011 the current conforming loan limits of $417,000 for most areas in the country and $729,750 for high-cost areas, including Santa Clara and San Mateo counties, will provide these markets with a much needed boost.


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.

Variations of this article have appeared in local area newspapers.

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

» Back to Real Estate Articles

Site Navigation