State Realtors forecast price drops

Even the normally bullish California Assn. of Realtors sees further decline ahead, according to the story posted at latimes.com by Los Angeles Times Staff Writer Diane Wedner.

"Home prices across the state will continue to drop next year, even as sales, spurred by the low prices on foreclosed properties, will keep rising in 2009, according to a California Assn. of Realtors forecast slated to be released today.

CAR projects that the median price of an existing California home will decline 6% to $358,000 in 2009. That's a smaller drop than the association is anticipating for this year, which looks to bring a 32% decline. The median price -- the point at which half the homes sell for more and half for less -- peaked in 2007 at about $558,000.

Prices won't start to head up, the association said, until more houses are sold, and there are fewer remaining on the market. In January, there were so many homes for sale in California that it would have taken 16.9 months to deplete the supply -- and that's not even counting the new homes that were likely to come on the market during that time, according to CAR. In August that ratio declined to 6.7 months, aided in part by the spike in sales activity in Riverside and San Bernardino counties.

But additional notices of default and foreclosure are expected in 2009 when a new wave of adjustable mortgages will reset. That will continue to push down the median prices of homes statewide, possibly into 2010, said Raphael Bostic, an associate professor at the USC Lusk Center for Real Estate.

Among the many "big ifs" in the equation: the availability and cost of home loans.

I'd add employment to that list of ifs. According to researchers over at the Economic Policy Institute, one in every nine U.S. workers is now either unemployed or underemployed. The 11% underemployment rate in September was the highest in some 14 years.

-- Lauren Beale

Thoughts? Comments?

Comments

[MyLessThanPrimeBeef]

Does a buyside broker's fiduciary duty require him to disclose, right next to the purchase offer, like the FDA health warning on cigarette cartons, the above mentioned price decrease forecast?

[Jackie Romulo]

I think their forecast is very optimistic.

[Rational Renter]

Didn't think I'd ever see the day when the NAR would come clean and admit prices will fall...but c'mon. Only a 6% drop next year after a 32% drop this year? Who comes up with this nonsense?

[Bubblewatcher]

They have no credibility. Their 2007 forecast called for a "modest decline". Yeah, right.

http://www.allbusiness.com/personal-finance/real-estate/3943179-1.html

[tew]

Looks like the first signs of the true bottom. Capitulation by the cheerleaders is always required to make a bottom.

I'm not saying they'll be wrong and home prices will increase in 2009. But once all of the bulls turn negative and loose hope it's the beginning of the end.

[Wes Boudville]

Maybe it's better late than never. The CAR is belatedly facing up to reality. Now where was this advice when you really needed it in 2004-5, if you had bought a house then?

Hey - somewhat offtopic - Have you listened to the radio recently? The NAR had these commercials about using realtors for buying residential real estate. But not in recent weeks, as far as I can tell. Now, their radio ads are about commercial real estate, which hasn't fallen as much.

Maybe their earlier ads were getting no traction, and just undermining their credibility.

[Name]

Every sell-side broker I've met is begging for an offer, any offer. It is good news that NAR finally decided to publicize thoughts of decline, it should speed the meeting of the bid/ask spreads that have immobilized the market with their girth.

Of course brokers only get paid on closings, and at this point they probably don't care about the prices so long as there is volume to pay the bills. We're all bears now.

[name]

@tew:

This isn't capitulation, just a change in tactics to increase transaction activity. Capitulation would be when NAR finally leaves their role in the hands of redfin and zillow. Look for that sooner rather than later, this cycle hasn't been kind to the old guard.

[flip]

CAR should change their name to CRAP - because that's what is coming out of their mouths.

[Cindy of Angels]

CAR's forecast for '08 called for a 5.5% price decline:
http://bayareahousingreview.com/2008/02/25/california-associ
ation-of-realtors-2008-real-estate-market-forecast/

However, prices are down by six times that. So, if CAR's track record holds, we can multiply the 2009 prediction (6%) by six (36%) for a more realistic number.

[Laker]

Last year NAR/CAR predicted 5% up, then they adjusted their prediction to -3%. The end is -32% as we know it today.
Today they are saying next year will see drops of 6%.
I say, all that you got to do is to adjust their numbers by a factor of -30%.
That means next year we will have a drop of 36%.

Next.....

[jb]

What is really surprising is that the higher ends have really just started to fall - maybe 15% off peak (e.g. West Los Angeles). 1-2 million dollar homes everywhere.

[TC]

I stopped listening to realtors once mine called me on the phone and tried to get me involved with one of those mangasteeno juice scams, right after telling me that it was a great time to buy investment property (Fall of 2007).

I am just glad my only mistake was buying a home I could afford in early 2004. At least I can weather the storm.

[Dan]

Home prices will continue to fall into 2011. Folks, look at the number of Alt-A mortgages set to reset over the next 3 years. It's going to be bloody.

But you know what?

The *only* thing that will result is normal, realistic house prices.

If you paid too much because of cheap money, sorry, but it's not my problem.

Actually, both of the jerks running for president are determined to make it my problem, so maybe I should hold that thought....

[aldo818]

Anyone have the numbers of loans to reset in the next couple years? How about the amounts that have already re-set?

Thanks,

[latesummer2009]

If CAR is admitting the market is going to drop 6% that means were in for a hellish year. 2009 looks as if it will be the year to remember.

Alt-A Loan resets will be the big story. S&P is gearing up by downgrading $280 Billion worth of these crappy mortgages today. Probably half of those, are in California.

Westside among other affluent areas are going to get whacked.

http://www.westsideremeltdown.blogspot.com

[Kali13]

another tidbit of b.s. - LOL! however there will always be a fish to pass your loss's unto if your lucky enough to find a fish.
a sucker is born every minuet. DON'T BUY YET!
STUPID IF YOU DO - HA HA HA!

[Cal]

Last years forecast:

October 2007:
Sales 334,000 Price $553,000
April 2008:
Sales 332,100 Price $424,000
June 2008:
Sales 342,300 Price $402,000
August 2008:
Sales 395,600 Price $375,000

2009 forecast :

September 2008:
Sales 419,500 Price $360,000

October 2008:
Sales 445,000 Price $358,000

I like the big bump up in sales just in time for the convention. After all things are going so swimmingly in the past month that sales can only go up.......

[Enlightenment]

Hey you Realtor idiots....it is a little late to say this. Heck everyone else EXCEPT for you liars have been saying this for the last 2 years...thanks for sticking your head in the sand when the public needed the truth...oh and thanks for lieing to all of those home buyers that you told that prices would always go up!

Time for society to switch over to the internet for home sales...just like we did with travel sales. Realtors are obsolete!!!