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California Real Estate Forecast for 2010

Home sales in Saratoga, Los Gatos, Monte Sereno and surrounding Santa Clara County communities are not really indicative of trends in other parts of the State, but public impressions may be colored by what consumers read about the real estate market in the State as a whole.  So just read this as background context information for decisions you will be making whether to buy or sell a home in 2010.

Leslie Appleton Young, California Association of Realtors economist recently spoke about the California real estate market, giving CAR’s forecast for 2010.  Here are some highlights:

  • 2004-2005 housing units sold peaked.
  • 2007 CAR membership peaked (lagged 2 years), and has since declined.
  • Median price of homes in California peaked in May 2007 and dropped to a low in February 2009.
  • California  is a tale of two housing markets: Distressed and Non-Distressed.  Median Price Distressed: $250,000; Median Price Non-Distressed: $485,000.
  • Santa Clara County: Median Price $555,000.
  • New construction in California was down 50% in 2008 and another 50% in 2009.
  • Housing starts are important to economic strength.  The prediction is for a “lack luster recovery next year” in 2010.
  • The median home price in California is forecast to rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year.
  • Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

“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.” 

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added.  “2010 will mark the beginning of the ‘new normal’ for California’s housing market.  This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

 “With distressed properties accounting for nearly one-third of the sales in 2010, invento