Copy for Real Estate Guide Column for 10-22-10
REAL ESTATE PATTERNS
By Ken DuVall

CALIFORNIA ASSN. OF REALTORS HOUSING FORECAST

Not surprisingly, weaker-than-expected economic recovery will result in a projected decline in California home sales for 2010, although sales are expected to edge up slightly in 2011, according to C.A.R.’s Forecast released this week.

It says California home sales for 2011 are projected to increase 2% to 502,000 units compared with 492,000 units (projected) in 2010. After 2 consecutive years of record-setting price declines, the median home price in California will increase 2% in 2011 to $312,500, according to the forecast. So be it.

“As the U.S. economy continues its tepid recovery, we’ll see some improvement in California’s economy,” said C.A.R. Chief Economist Leslie Appleton-Young. “We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and a decrease in unemployment.” Amen to that. Our unfortunate construction workers represent a huge percentage of the jobless.

“A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited attractive financing will cause continued softness in the high end. There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties,” per Leslie.

“The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of any economic recovery,” said Appleton-Young. “What is certain is that favorable home prices and historically low interest rates will continue to make California homeownership attractive for those who are in a position to buy.” Chico homes are a bargain today. There are a lot of distressed properties here too.

Foreclosed homes accounted for a heretofore incredible 24% of all residential sales in the second quarter of 2010, RealtyTrac reports. The average price of foreclosed properties was more than 26% less than the average price of non-foreclosures. Banks have foreclosed on 3 million U.S. homes since 2007.

Nevada, Arizona, and California posted the highest percentages of foreclosure sales in Q2.Foreclosures accounted for an enormous 43% of all sales in California, the third highest among the states. California pre-foreclosure sales (short sales) increased 8% from the previous quarter, but were down 4% from the second quarter of 2009.

California bank-owned sales increased 1% from the previous quarter but were down 45% from the second quarter of 2009. Lenders with foreclosure discrepancies nationwide, the latest shoe to drop in a growing fiasco, calls into question whether large financial institutions sufficiently documented the vital details surrounding repossessed properties. What a colossal nightmare.

Our already fragile housing market certainly didn’t need any more problems, and the full ramifications of this situation are not yet clear. What is clear is we still have a substantial backlog of foreclosed properties- with some 10 million more in the hopper- that may at some point hit the marketplace. Bottom line: The overall housing dilemma is not going be resolved for several years. As always: buy on bad news, sell on good.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.