LOS ANGELES--California will remain a buyer's market next year, with prices declining across most of the state and home sales climbing for the second year in a row, a trade association for real estate agents said Wednesday.
In its 2009 forecast, the California Association of Realtors calls for the median price of a home in the state to decline by 6 percent to $358,000 from the group's projection for this year of $381,000.
The forecast also anticipates sales of existing single-family homes will rise 12.5 percent to 445,000 units -- essentially the same as the increase in sales this year over 2007.
"The worst is over, but we're still not out of the woods," said Leslie Appleton-Young, the association's chief economist.
The association's outlook hinges on the health of the U.S. economy and the nation's credit markets, which have been strained, making it tougher for would-be homebuyers to get financing.
The forecast assumes that economic growth in the first half of next year will be in recession territory -- either flat or negative -- then improve in the second half of the year. And that the credit markets will stabilize sometime this year or early next year.
But all bets are off if the state's economy -- already considered by some economists to be in recession -- worsens should the U.S. experience a sharper-than-expected economic downturn.
"This forecast is not baking in a recession with huge job losses," Appleton-Young said.
California is in the third year of a housing slowdown that has been among the worst in the nation. Pricey coastal markets such as San Francisco have seen moderate price declines compared with inland regions, where foreclosures have helped drive down prices by double-digits.
Several of the state's metro areas, including Stockton, Merced and Modesto, have among the highest foreclosure rates in the nation.
Home sales statewide bottomed in late 2007 at 265,000 units, but since then, have turned around, fueled largely by buyers seizing on foreclosure bargains.
The forecast calls for home sales to ebb statewide until the second quarter of next year due to seasonal slowdowns.
Foreclosure sales should continue to be the main factor in driving down the statewide median home price next year.
The forecast also calls for sales of distressed properties to peak early in the year, which should help slow price declines.
"I would think by 2010 we would be up by mid-single digit (percentages)," Appleton-Young said, referring to the state's median home price.
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