Next Year's California Resales May Slip as Prices Rise

Existing home sales in the Golden State will slow somewhat "to a more sustainable pace" in 2010, according to the latest forecast from the California Association of Realtors. Thanks to a strong market for distressed properties, sales in the Golden State rebounded this year from double-digit declines in 2007 and 2008. But next year will be "the new normal," said CAR president James Liptak, with a steady stream of sales driven by distressed properties at the low end and moderate price appreciation. The group, the country's largest state organization of realty professionals, expects the median price to rise 3.3% next year, from $271,000 to $280,000. But it is calling for sales to dip 2.3%, from a projected 540,000 units in 2009 to 527,500 in 2010. About a third of the projected sales will be foreclosures or short sales. "Housing in California has become a tale of two markets," Mr. Liptak said at CAR's annual convention in San Jose. "The low-end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. But sellers at the high end continue to be challenged by the ability of homebuyers to secure financing as well as their concerns about where prices are headed." Chief economist Leslie Appleton-Young listed several "wild cards" that could impact the forecast, with distressed properties being paramount. "Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier than expected wave of foreclosures come to market next year," she said.