by Kerry Curry
California home sales and median prices should improve only slightly in 2012, as the the tepid economic recovery, uncertainty and tight lending keep the lid on greater momentum for housing.
The California Association of Realtors forecasts the state’s home sales will grow about 1% next year to 496,200 units, following essentially flat sales of 491,100 this year. CAR said 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 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.”
Still, Peerce said sellers who held off listing their homes this year may decide to jump into market next year, improving the mix of homes for sale compared to the last few years.
However, distressed sales will remain a key segment of California’s housing market next year, she said.
California default notices spiked 55% in August, and the number may rise in coming months as mortgage servicers shake off the robo-signing freeze, according to RealtyTracSenior Vice President Rick Sharga.
The California median home price is forecasted to increase 1.7% in 2012 to $296,000. The median home price for 2011 projects about 4% lower than $291,000 last year.
Still, any number of factors could throw off CAR’s forecast.
Prices could face other challenges, for example, such as the expiration of the conforming loan limits in October and the ongoing deficit struggle.
“The wild cards for 2012 are many, including federal, fiscal, monetary and housing policies; the contentious political climate during an election year; and the strength of the U.S. economic recovery,” said Leslie Appleton-Young, vice president and chief economist at CAR.