I had something more light planned for today — an insanely fun post brimming with whimsical imagery and clever metaphors.
OK. No I didn’t. But, if I didn’t have a full dance card of appointments and escrows begging to be opened, I could have done better than this.
From California Association of Realtors (little “R”) Vice President and Chief Economist Leslie Appleton-Young, here is a dose of runner-up fun showing California housing price trends dating back to 1970.
According to James Liptak, President of CAR (and as recovered from my spam folder this morning):
The upshot is that, statewide, we can expect the median home price to rise 3.3 percent to $280,000 in 2010, while sales will moderate to a more sustainable pace, posting a 2.3 percent decrease next year. 2010 should mark the beginning of a “new normal” for California’s housing market, and 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.
Honestly, that sounds about right.
ABOUT THE AUTHOR Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. If not-so static web sites are your thing, go here at once where you will find loads of real estate information including homes for sale, market trends, floor plans and more. Kris's hobbies include fencing and spot welding. She likes kittens. 
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{ 15 comments… read them below or add one }
“Home values in the nation’s second largest city, Los Angeles, have fallen 43.3% since June 2006 to a median of $313,000. They are expected to dive another 20.2% over by June 2010, and then start to climb in 2011. ”
http://finance.yahoo.com/news/Homes-About-to-get-much-cnnm-699910894.html?x=0
So why are we going to do 20% better than LA?
Also, given this track record, why listen to Young:
2007-04-10
“It doesn’t look like there’s a recession coming any time soon,”
2007-04-10:
“It’s God’s country, what can I say,” Leslie Appleton-Young, chief economist for the California Association of Realtors, told an audience of agents Tuesday in Terra Linda. “When is the 30 percent decline in Marin County’s market going to happen? Not in my lifetime.”
2008-12-18:
“Another month of plummeting home sales in Marin
Another month of plummeting home sales in Marin included a price drop of nearly 30 percent from November 2007, as discounted foreclosure sales continued to drive the Bay Area market.”
You should disable comments unless you don’t mind dissenting opinions!
I don’t mind dissenting opinions.
And my “feels right” remark is good only in San Diego. I can’t speak for the other areas of the state, since I don’t live their market day in and out.
But we’re just going off feelings here, right? Because if he had any evidence, he would have provided it, wouldn’t he?
I don’t think they have computer-generated models or dozens of economists pouring over statistics, I think he’s just free-wheeling.
Sales go down 2.3% next year? I guarantee they’re going to go up substantially in SD, this year’s total is on track to beat last year’s sales by 20%.
3.3% gain next year is way too optimistic. It’s also median housing prices which is almost a useless statistic anyway. 2.3% reduction in volume doesn’t make sense either. Coming out of a recession, volume should increase, not go down.
These things are all related. Peter Schiff has been predicting everything dead on (and getting laughed at while doing it) over the last few years, and he predicts that we’ll have economic growth next year, but it’ll be so slow that it’ll still feel like a recession. Considering his almost flawless track record of predictions, I think this carries some weight. Speculators are scared of real estate now, and people aren’t misguided into thinking that real estate can’t go down. With the constant stream of distressed properties, we’ll probably not see any appreciation beyond statistical noise for the next year or two. We could even see a little more of a slide in prices.
The reality is everything is going to be based on lending standards. If they soften in the next year so people can purchase with 10-15% down instead of 20% down, you’ll see a significant surge in volume and probably a notch up on prices. If lending standards tighten or stay the same, prices should stay flat or go down a little. Volume will move with the same correlation.
Oy. Where to start?
Nobody really knows where we will be in a year, but as Jim the Realtor will tell you, an agent on the street and his barometer are better than a concert hall full of economists. So, here is what I “know.”
-In my market, anything starting with a 5 or even a 6 is hotter than hot. Anything with a leading 7 or 8 is a tougher road.
-Everyone still wants a “deal,” but the dead-end street of lower-end short sales and foreclosures has resulted in a much smaller buyer pool for the next price tier and the one after. At the same time, this log jam is shoring up the lower end of the market.
-The smaller buyer pool for mid- to higher priced homes is a problem which is offset to an extent by the insanely low inventory. (”I don’t need to or can’t afford to sell, so I won’t.”)
- Too many variables (first-time buyer money, interest rates, lending practices, appraisal debacles, shadow inventory, jobs), any one of which, or a combination, could change the rules.
- Sorry, Jim. I don’t think a downward trend in inventory on a statewide level is that crazy. The “have to” movers are the only ones moving in significant numbers. The “want to” movers are staying put, and I see that trend hanging around for awhile. So, if we have a measurable increase in sales, I suspect it will come at the hands of the shorts and REOs, not the traditional sales. My guess is that, in San Diego, sales will be flat. (Right click this and beat me over the head with it next October.)
-Caveat emptor: My other half has left the building tonight but may have a very different spin on this. I’ll let him chime in later.
-From Sven: “With the constant stream of distressed properties, we’ll probably not see any appreciation beyond statistical noise for the next year or two. We could even see a little more of a slide in prices.” Through out the last sentence, and I tend to generally agree. The qualifier is this — I think a lot of folks waiting for the Spring fling will find that the seasonal factor will be more than offset by a surge in inventory (for the same reason), so we may have one more pricing bump in the road, albeit minor.
The thing I love about forecasts is the guesswork.
Leslie Appleton-Young is an economist, and Pierce Brosnan is a world class tenor
(I suffered through the Mama Mia movie last week no thanks to Mrs. Smithers)
Wake me up when they start selling in RSF.
Does CAR or NAR have any credibility outside it’s members?
I’m not about predicting the future this morning. I can describe definitively what is happening at the entry level in many sub-markets of San Diego. Contrary to Sven’s comment (Sorry, Sven), there appear to be many speculators/investors competing for almost any property starting at or below $4ook. North of I-8, where we do most of our work, condos listed below $300k are commonly receiving multiple offers and are getting substantially overbid. Many are cash buyers suggesting investors/speculators. One can say that these properties were priced too low to begin with, but I believe median price increases for this segment of the market are already being (And will continue to be) revealed in the statisics and will be sustained for the forseeable future (Darn, I said I wouldn’t do the prediction thing). There are just too many buyers – end users, as well as investors, chasing too few properties in this price range. Crazy as it sounds, we are regularly running into properties with 20, or more, offers. Only one buyer gets it, leaving the others to move on and compete for the next offering.
Thanks for your article here and reference to the CAR economist report.
I also am not about predicting the future of real estate here in Orange County or California.
We do see “As Good As Gold ~ Homes Under $1M at the Orange County Housing Market” http://explorerealestate.wordpress.com/2009/10/20/as-good-as-gold-homes-under-1-million-at-the-orange-county-housing-market/
Homes under $500k are selling average of about a month market time. Those between $500k and $1 are selling average in less than 2 months.
The 8000 tax credit is working very well for crooks.
http://www.cnbc.com/id/33430867
My guess is that, in San Diego, sales will be flat.
Well-priced anything is selling like gangbusters these days. If they can keep rates under 6% (big if, but another trillion or two should do it) I think we’re going to have a big year, with a lot more REOs to sell.
Lunch says that 2010 sales are +20% over 2009.
Have you guys been to the indain casinos lately?If times are so bad why are they packed with gamblers every weekend?
After the taxpayers eat all the bad loans from the banks will it be back to business as usual?
People keep sending me your hilarious video, now up to 78,000+ views. It is really funny, keep ‘em coming!
All one has to do is look at the immense amount of high end inventory hitting the market in La Jolla, Rancho Santa Fe etc. These homes are the reason for the Median price increase. This is misleading. This huge amount of inventory will be dropping in price over the next year or so. This will pull down the entire San Diego housing market. Do not be fooled.
These are the people who treat their mortgages like a business deal and not a moral obligation. They will walk. Understanding this will save you hundreds of thousands. The cliff is approaching.
Kobia – Strategic defaults are modern cultural phenoms, no doubt. No longer a source of shame (and often seen as a badge of honor), I agree that 2010 is going to be dicey. I still say that the lower price points will fair well from here on out. That is simply where the loans and the buyer action are. As for the higher end homes, we have a tough road ahead.