California Housing Market Expected to Improve in 2013; Lack of Inventory to Hamper Sales
According to the California Association of Realtor's "2013 California Housing Market Forecast," released this week, California's housing market will continue to recover in 2013, as home sales are forecast to increase for the third consecutive year and the median price to rise for the second straight year.
The C.A.R. forecast sees sales 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. Sales will be stronger in higher-priced areas, where there are more equity properties and a somewhat greater availability of homes for sale."
"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," said Arnold.
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," Appleton-Young continued.