CAR Sees Moderation in Home Price Rises

Home price appreciation will moderate next year in California, and home sales will decline slightly from this year's record pace, according to the California Association of Realtors.In its 2006 Housing Market Forecast released at the CAR Centennial Realtor Expo in San Diego, CAR predicted that the median home price in California will rise 10% next year to $575,500. (This year's projected median home price is $523,150.) The forecast calls for sales of 630,610 units, which would be a 2% decline from this year's projected total, the association said. "We expect the fixed mortgage interest rate to rise to 6.4% next year, and the adjustable rate to hit 5.1%, which will make it more difficult for many families in California to be able to afford a home," said CAR president Jim Hamilton. "While still near their historic lows, upticks in interest rates coupled with the continued increase in the median home price will push affordability in California to a new all-time annual low of 15% next year." The association can be found online at http://www.car.org.