View a video of C.A.R. Vice President and Chief Economist Leslie Appleton-Young discussing the 2012 Housing Market Forecast.

SAN JOSE (Sept. 20) – California home sales and median price are predicted to improve only slightly in 2012, as the continuation of the tepid economic recovery, uncertainty about the future, and funding challenges for residential mortgages are expected to keep the market moving sideways, with little foreseeable momentum in either direction, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2012 California Housing Market Forecast” released today. 

The forecast for California home sales next year is for a slight 1 percent increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.

“Despite the run of unforeseen global events in the first half of this year that slowed the overall economy, 2011 home sales are projected to essentially remain unchanged from last year,” said C.A.R. President Beth L. Peerce.  “Looking ahead, the fundamentals of the housing market – such as low mortgage rates, high housing affordability, and favorable home prices – are expected to continue, but at this point, a strong housing recovery will depend on consumer confidence, job creation, and the availability and cost of home loans.

“Discretionary sellers will play a larger role in next year’s housing market,” said Peerce.  “Those who held off selling in 2011 may list their homes in 2012, thereby improving the mix of homes for sale compared with the last few years.  Additionally, distressed sales will remain an important segment of the overall market as lenders continue to work through the foreclosure process.”

The California median home price will increase 1.7 percent in 2012 to $296,000 in 2012, according to the forecast.  Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4 percent in 2011 to $291,000.

“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.

“The most likely scenario is for the modest recovery to continue, and this should push sales up slightly next year by 1 percent and maintain levels that are significantly higher than those recorded during the depths of the housing downturn.

“The wild cards for 2012 are many, including federal, fiscal, monetary, and housing policies; the contentious political climate during an election year; and the strength of the U.S. economic recovery,” said Appleton-Young.

Appleton-Young will present an expanded forecast Wednesday afternoon during CALIFORNIA REALTOR® EXPO 2011 (http://expo.car.org/), running from Sept. 20-22 at the San Jose McEnery Convention Center in San Jose, Calif.  The trade show attracts nearly 6,500 attendees and is the largest state real estate trade show in the nation. 

Don’t miss “Why Lenders Can’t Lend:  The Economic Perspective” during CALIFORNIA REALTOR® EXPO 2011.  C.A.R. Vice President and Chief Economist Leslie Appleton-Young will moderate a panel of renowned economists as they delve into the front- and-center issue facing the market and REALTORS® next year.  The panel is scheduled to be held Thursday, Sept. 22, from 2 p.m. – 3:30 p.m. at the San Jose Convention Center.
2012 FORECAST FACT SHEET

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Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

As with many investments, the best time to get in is when most others are sitting on the sidelines. 

Mortgage rates are at a 40 year low, and homes in many areas are ultra-cheap.  Meanwhile, demand for rentals has risen in more than 500 cities.  With this increase, it has allowed landlords to charge more.  Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010 to $1,320 a month. 

You’ll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors.  If you can hang on that long, you have got a good shot at solid gains, especially if you are financing the home. 

Related articles

• Calling All Investors to the Rental Market (gloriawalters.wordpress.com)
• Cashing in on rental property (money.cnn.com)

When the rebound arrives, desirable zip codes will see price jumps first.  Real estate is always local.  

Here are a few things to start watching in your neighborhood: 

How fast are homes selling?  It is a good sign when price drops slowly down, inventory levels are actually a better gauge of where your market is headed.  Ask a Realtor to tell you the number of listings now on the market in your area and the number of homes sold over the past year.  An example would be that there are 100 listings and there were 240 sales last year, or an average of 20 per month.  That equals a five-month supply, which is considered stable.  More than six months and it’s a buyer’s market; less than three and sellers probably have the upper hand.

Compare your neighborhood’s price-to-rent ratio with what it was before the housing boom.  Calculate the price-to-rent ratio, or the price of a home divided by one year’s rent on a comparable one.  In general, it’s cheaper to buy when the price-to-rent ratio is below 15. 

A decrease in foreclosure filing is often an encouraging sign but not always the case depending on the processing delays in foreclosures.   Distressed owners tend to fall behind on lawn cutting and house painting long before a foreclosure.  If you see several places in disrepair, don’t expect your home value to rise soon. 

If you area is a prime location.  As buyers return, they naturally grab places with short commutes and better schools and amenities which will help increase the sales price.

If you are still unsure, you should contact a REALTOR to discuss the advantages of purchasing a home and find out how much of a loan you can qualify for. 

Don’t be left sitting on the fence saying should’ve…..would’ve…..could’ve  Act now and contact your Real Estate specialist.