The California Association of Realtors expects home sales in the Golden State to increase a "lackluster" 2% in 2011, the group said in its annual forecast.
The increase, to 502,000 units, will follow a 10% decline in project sales this year, to 492,000 units. But after two consecutive years of declining prices, the median is forecast to climb 11.5% this year, to $306,500, and 2% more in 2011, to $312,500.
"The minor improvement in the housing market next year will be driven by the slow pace of recovery in the economy and modest job growth," said CAR President Steve Goddard. "Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role."
Goddard said the state's housing sector can be divided into two distinct markets, with the segment below $500,000 driven by distress sales and the segment over $500K constrained by restricted financing.
While the number of foreclosures and short sales over the half-million mark is on the upswing, there has been a lack of lower-end properties for sale, which has put upward pressure on prices.
Less expensive houses for sale are so rare that many are seeing multiple bids, according to Goddard.
Leslie Appleton-Young, CAR's chief economist, predicted that the supply of lower-end houses for sale will continue to be lean. And she expects larger inventories and limited, more expensive financing will cause the high end segment of the market to remain soft. While there is "some indication" that lenders will accelerate the number of foreclosures they put on the market, she said "we do not anticipate that lenders will flood the market with distressed properties."
