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Calif. market forecast shows steady climb

Posted: October 11, 2012 2:00 a.m.
Updated: October 11, 2012 2:00 a.m.
 

Assuming no surprises or major economic setbacks, 2013 is likely to be the third consecutive year to see improvements in California’s housing market.

The new year is also expected to see the second straight year of increases in the state’s median price, the California Association of Realtors reported in its annual forecast released Tuesday.

The Santa Clarita Valley market has been mending over the last several years, and I believe it is likely to be one of multiple local markets throughout the state that will lead the way toward full recovery. Like other regions, a lack of inventory is slowing local sales.

The C.A.R. forecast has home sales statewide 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.

“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,” Arnold said. “Sales will be stronger in higher-priced areas, where there are more equity properties and a somewhat greater availability of homes for sale.”

Arnold agreed that housing affordability has never been stronger — with record-low interest rates and favorable home prices, combining to create a once-in-a-generation opportunity to buy a home in California.

C.A.R.’s forecast projected growth in the U.S. Gross Domestic Product of 2.3 percent in 2013, after a gain of 2 percent in 2012.

With job growth of 1.6 percent in California, the state’s unemployment rate should decrease to 9.9 percent in 2013 from 11.7 percent in 2011 and 10.7 percent in 2012.

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.

The wildcards for 2013 include federal monetary and housing policies, state and local government finances, housing supply, and the actions of underwater homeowners — not to mention the strength of the overall economic recovery.

Erika Kauzlarich-Bird is president of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

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