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| C.A.R.'s California Housing Market Forecast for 2005: Double-Digit Increases in Median Price to Continue as Sales Moderate to Second Best Year on Record |
SANTA CLARA, Calif., Oct. 6 /PRNewswire/ -- The median price of a
single-family home in California will again increase by double-digits next
year, reaching $522,930, while sales will decrease slightly from this year's
pace to the second best year on record in 2005, according to the California
Association of REALTORS(R) "2005 Housing Market Forecast" released today.
The median home price in California will increase 15 percent to $522,930
in 2005 compared with a projected median of $454,720 this year, while sales
for 2005 are projected to reach 603,700 units, falling 2.5 percent compared
with 2004. The double-digit gain in the median price of a home, which
California has experienced for most of the past four years, will again be
fueled by the continuing shortage of housing across much of the state,
according to C.A.R. economists. California typically gains nearly 250,000 new
households, yet only will build about 200,000 new housing units this year,
creating a shortfall of about 50,000 units.
"Homebuyers next year will face slightly higher mortgage interest rates,
approaching 7 percent by year's end, which will make it more difficult for
many families in California to be able to afford a home," said C.A.R.
President Ann Pettijohn. "Coupled with rising home prices, affordability in
California will fall to an all-time annual low of 16 percent next year."
"We expect the economy in 2005 to generate modest growth in jobs both
nationally and here in California, while productivity gains and competition
will likely keep inflation in check next year," said C.A.R. Vice President and
Chief Economist Leslie Appleton-Young. "While the increase in interest rates
will be enough to moderate the pace of home sales in 2005, population and
household growth will continue to put pressure on home prices, resulting in
greater price appreciation in California compared with the nation."
Home sales for California in 2004 are expected to reach a record 619,300
units, surpassing the prior sales record of 601,770 set in 2003, according to
C.A.R. economists.
"Regionally, the areas with the greatest potential for home sales growth
are the inland regions of the state -- the Central Valley and the Inland
Empire region in Southern California, which have experienced significant
population gains in recent years as well as robust new home-building
activity," said Appleton-Young.
"The Southern California housing market in 2005 is likely to slow from the
torrid pace of sales and rapid price appreciation that we experienced
throughout most of this year," she said. "The San Francisco Bay Area housing
market, which advanced at a more measured pace than other regions in the state
this year, is likely to see less slowing in 2005 compared with other areas of
the state."
Appleton-Young will deliver her highly anticipated forecast today during
C.A.R.'s California REALTOR(R) EXPO 2004 in Santa Clara, Calif. The
convention and trade show attracts more than 7,500 attendees.
The California Association of REALTORS(R) (http://www.car.org) is one of
the largest state trade organizations in the United States, with more than
150,000 members dedicated to the advancement of professionalism in real
estate. C.A.R. is headquartered in Los Angeles.
2005 FORECAST FACT SHEET
2003 2004 2005
CALIFORNIA ECONOMY
Unemployment rate 6.7% 6.2% 6.1%
Job Growth 0.4% 1.0% 1.9%
Population Change 1.5% 1.5% 1.5%
Single-Family Resales 601,770 619,300 603,700
% Change 5.1% 2.9% -2.5%
Single Family Median Price $372,720 $454,720 $522,930
% Change 17.9% 22.0% 15.0%
SOURCE California Association of REALTORS
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CONTACT:
Mark Giberson of California Association of
REALTORS, +1-213-739-8304, markg@car.org
