C.A.R. Predictions for 2013

California Home Sales Predicted to Continue Gradual Climb in 2013

California’s housing market will continue to recover in 2013, as home sales are forecast to increase for the third consecutive year and the median price to rise for the second straight year, according to C.A.R.’s “2013 California Housing Market Forecast,” released Tuesday.

The C.A.R. forecast sees sales gaining 1.3 percent next year to reach 530,000 units, up from the projected 2012 sales figure of 523,300 homes sold.  Sales in 2012 will be up 5.1 percent from the 497,900 existing, single-family homes sold in 2011.

C.A.R.’s forecasts the average for 30-year fixed mortgage interest rates will edge up to 4 percent after six consecutive years of declines, but will still remain historically low.

The statewide median home price is forecast to increase a moderate 5.7 percent to $335,000 in 2013.  Following a decrease in 2011, the California median home price will climb a projected 10.9 percent in 2012 to $317,000.

“The housing market momentum which began earlier this year will continue into 2013,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes.”

“The actions of underwater homeowners will play an important role in housing inventory next year, with rising home prices inducing some to stay put and others to list and move forward," she said.

Despite the overall outlook for the state, some regions are being hit with low inventory:

“The market has improved moderately over the past year, and we expect that to continue into 2013,” said C.A.R. President LeFrancis Arnold.  “Sales would be even higher if inventory were less constrained in REO-dominated markets, particularly in the Central Valley and Inland Empire, where there is an extreme shortage of available homes.  Sales will be stronger in higher-priced areas, where there are more equity properties and a somewhat greater availability of homes for sale.”

Another study echoes the fact that some regions of the state aren’t seeing any signs of improvement.

Fiserv, a real estate data company that recently evaluated 384 of the largest housing markets, found that several Central Valley markets aren’t showing signs of recovery because of high unemployment and foreclosure rates.

In fact, the top three markets are in California:

•                Merced. This Central Valley city experienced a 69.7 percent decrease from the peak to the first quarter of 2012.

•                Modesto. A 64 percent decrease over the same time period.

•                Stockton. This city saw a 62.8 percent drop during the period.

Other markets that saw decreases more than 50 percent are Vallejo-Fairfield, Bakersfield-Delano, and Riverside, San Bernardino, Ontario.

Michele Dawson is a freelance writer based in Phoenix, Arizona.