When will the housing market be 'corrected'?
A neighborhood in Carmel Valley. — Howard Lipin / Union-Tribune staff
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The housing recovery in California is expected to continue through to 2013, but the market won't be "corrected" until as far off as 2017, said the lead economist of a statewide Realtors group on Tuesday.
Homes sales and prices are expected to keep rising, but lower-than-normal inventory levels and underwater mortgages are key hindrances to a faster recovery, says Leslie Appleton-Young, of the California Association of Realtors.
"The market is correcting," said Appleton-Young during a web conference with reporters. "...It will be three to five years before we are corrected."
She forecasted sales will rise 1.3 percent to 530,000 units next year, based on the projected tally of 523,300 units this year. That's a slower growth than that of 2011 to 2012, which is roughly 5 percent.
The momentum in prices also is expected to carry through to 2013, a result of pent-up demand for a limited housing supply. The median price could rise 5.7 percent to $335,000 in 2013. That's lower than the projected price growth from 2011 to 2012, an estimated 11 percent. The state has a 3.2 months' worth of housing inventory, significantly lower than the 16 months'-plus supply we saw roughly four years ago.
| 2008 | 2009 | 2010 | 2011 | 2012 forecast | 2013 Forecast | |
|---|---|---|---|---|---|---|
| Single-family resales | 441,800 | 546,900 | 492,300 | 497,900 | 523,300 | 530,000 |
| Year-over-year change | 27.3% | 23.8% | -10.0% | 1.1% | 5.1% | 1.3% |
| Median Price | $348,500 | $275,000 | $305,000 | $286,000 | $317,000 | $335,000 |
| Year-over-year change | -37.8% | -21.1% | 10.9% | -6.2% | 10.9% | 5.7% |
“Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes,” said Appleton-Young in this week's report.
A recent study from housing website Zillow shows that more than one-third of San Diego County borrowers owed more on their homes than their properties are worth in the second quarter. Appleton-Young says what underwater borrowers throughout the state will do -- be it selling or holding -- will have a big effect on next year's housing recovery.
Other things to watch next year that will have a bearing on the housing market include: policies related to the state,local and federal governments; and housing and monetary policies, Appleton-Young said.
