Group: California housing sales, prices to keep falling in 2008
AP Business Writer
LOS ANGELES (AP) ” Housing sales and prices will fall further next year in California, as unsold homes keep piling up and many buyers hold out for lower prices, a trade group said Wednesday.
In its 2008 forecast, the California Association of Realtors said it expected statewide sales of existing homes to fall another 9 percent to 334,500 units.
Still, the association said that would be an improvement over the projected drop of 23 percent this year, compared to 2006.
“It’s a moderation in the pace of decline, so from that perspective I guess it is positive, but we’re certainly getting to a relatively low level of sales,” said Leslie Appleton-Young, the association’s chief economist.
The forecast also calls for the median price of a California home to decline 4 percent to $553,000, compared to the group’s projection for this year’s median sale price of $576,000.
California’s housing market has been stung by declining sales and lagging home values, particularly in inland areas where developers built new homes during the housing boom.
Mortgage lenders, meanwhile, have been struggling to find cash in the wake of rising delinquencies and foreclosures among financially strapped borrowers, especially those with subprime loans.
As a result, the mortgage industry has tightened lending standards, making it harder for homeowners to refinance or for new buyers to enter the market ” exacerbating the slowdown in home sales.
The conditions are likely to persist into next year, stifling sales in California, the trade group warned.
“Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year,” said Collen Badagliacco, the trade group’s president.
Given the circumstances, homeowners contemplating a sale should think twice about putting their home on the market, said Appleton-Young.
“For sellers, because inventory is so much higher than it was a couple of years ago, the advice is don’t list your home for sale unless you’re really interested in selling your house,” Appleton-Young said.
For would-be homeowners, 2008 could be the time to jump into the market, she said.
“For buyers who have been waiting on the sidelines, there’s going to be good opportunity for them,” Appleton-Young said. “We’re expecting to see continuation of a good mortgage rate environment.”
The more affordably priced, inland areas of the state, such as the Central Valley and the Inland Empire east of Los Angeles, will see a more pronounced softness in sales, in part because of high levels of unsold inventory on the market, the group said.
Coastal regions and more pricey spots such as the San Francisco Bay, areas of San Diego, Los Angeles and Orange counties should fare better, the association said.
“There’s tremendous regional disparities in the state,” Appleton-Young said. “As you look at inland areas, where you have a huge supply of new housing that is a fairly close substitute with the existing housing, in those areas the recovery is going to take longer. It will happen, but it will probably take past 2009 for that to show itself.”
On the Net:
California Association of Realtors: http://www.car.org
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