Median home price in California will increase 3.3 percent in 2010, according to a forecast released Thursday by the Los Angeles-based California Association of Realtors, but home sales will dip 2.3 percent from this year's level.
According to the group's 2010 California Housing Market Forecast, the median home price in the state will increase to $280,000 next year. That's up from $271,000 this year. However, the forecast says home sales will drop to 527,500 units in 2010, down from a projected 540,000 units this year.
"California's housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market," said C.A.R President James Liptak. "This follows two years of double- digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace."
Liptak said the sharp drop in home prices combined with near-record-low interest rates made homebuying particularly attractive this year for first-time home buyers. He also noted that the federal tax credit helped more than 1 million first-time buyers purchase homes. The federal tax credit expires next month but Liptak and others in the industry are urging Congress to extend the credit and expand it to all buyers.
"Housing in California has become a tale of two markets," Liptak said. "The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of home buyers to secure financing as well as their concerns about where prices are headed.
"While demand from first-time buyers for low-end properties will continue throughout next year, sales could be impacted if discretionary sellers do not return to the market by the second half of 2010," he said.