Wednesday, October 15th, 2008 at 7:19 PM
2009 Forecast
The official CAR forecast for 2009 is out, plus a couple of my graphs at the bottom.
from sddt.com
Median prices are expected to decrease slightly and sales will continue to rise in 2009, which could lead to stabilization in housing prices, according to the California Association of Realtor’s annual forecast.
In the 2009 forecast, the C.A.R. predicts the median price of detached single-family homes will decline by 6 percent to $358,000 from this year, or a 42 percent decrease from that state’s peak median price of $622,000 in May 2006.
However, the association predicts sales will increase by 12.5 to 445,000 homes — essentially the same year-over-year increase from 2007. An increase in foreclosures and short sales in the past year and a half have made a significant impact on home prices, said C.A.R. economist Robert Kleinhenz. Though he said sales stabilized as early as late 2007, pricing still needs to level out, and will do so when the rate of foreclosure returns to normal. He said prices in San Diego could stabilize faster than the rest of the state.
“Many say that the San Diego market was like the canary in the coal mine that led the whole housing market down in the decline in sales and decreases in home prices,” he said.
“As we look at San Diego sales are up 4 percent year-to date and that’s a little bit better than the state as a whole — which is up 2.7 percent year to date.”
In San Diego month-over-month total sales of attached and detached homes have been higher than 2007 from May to September, despite a sales being down 21 percent in the first four months of the year.
Despite the prediction market prices will have increased affordability over then next three quarters, C.A.R. President William Brown said. A factor in sales will be the possible “recessionary economic conditions” across the county before a turn around occurs in the second half of next year.
“Going forward, a great deal depends on the state of the financial system in general and the real estate finance situation in particular, as well as the flow of distressed sales through the market,” Brown said. More adjustable-rate mortgages are scheduled to reset in 2010 and 2011, and though Kleinhenz acknowledged they could cause some trouble for the housing market, he said it is possible that many of these loans have either already defaulted or will be modified before they reset.
The association’s outlook hinges on the health of the U.S. economy and the nation’s credit markets, which have been strained, making it tougher for would-be homebuyers to get financing. The forecast assumes that economic growth in the first half of next year will be in recession territory — either flat or negative — then improve in the second half of the year. And that the credit markets will stabilize sometime this year or early next year. Brown said it is important to first restore the “flow of credit” to move buyers into the market.
“The worst is over, but we’re still not out of the woods,” said Leslie Appleton-Young, the association’s chief economist.
The forecast and other C.A.R. statistics are based on single-family detached existing home sales.
The Associated Press contributed to this report.
Here is a link to their forecast where they have a boatload of stats:
http://www.car.org/media/pdf/econpdf/10-15-08EXPOForecast-Final.pdf
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Here are two graphs to illustrate how the first nine months of 2008 compares to previous years, using closed sales from our local MLS for detached and attached homes:
Pardon my caveman graphics, but if you chart possible trend lines from 1996, they might look like this, depending where you start. The 1997 tax change that allowed for homeowners to take up to $500,000 in tax-free profits if they lived in the house 2 out of the last 5 years is where the frenzy was born. If you want to be conservative, can you live with the lower gray line? In summary, my forecast is that if you can find a house you love around $200/sf, you should strongly consider buying it!
Posted on Wednesday, October 15th, 2008 at 7:19 PM in Psycho-babble | 12 Comments » | 
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Down 6%? Is that down another 10% and then an immediate turn and progressing 4%? What kind of number is -6% when we are seeing no end to -3% to -4% per month?
Rob Dawg | October 15th, 2008 at 7:48 pmIt’s worse than that – the C.A.R. August median sales price was $350,140, and he says that the 2009 median SP will decline 6% to $358,000???
Jim the Realtor | October 15th, 2008 at 7:58 pmAll I needed to see was this idiots commment:
“The worst is over, but we’re still not out of the woods,” said Leslie Appleton-Young, the association’s chief economist.
That just means things have got a long way to go. Her 2006 comment was HOUSE PRICES NEVER GO DOWN……How does she still have a job?
SMC | October 15th, 2008 at 8:01 pmJtR, I saw that fuzzy math in the original article from the UT and had to read it about 10x before I came to the conclusion that they are simply throwing crap at the wall and hoping people just read the tag lines.
Either they’re all dopes or they take us for idiots.
SD_Coastal | October 15th, 2008 at 8:15 pmFuzzy alright, if you look through their whopping 134-page forecast at the link at bottom, you’ll see scant evidence to back-up their guesses.
Mostly they are banking on the increase in sales Y-O-Y lately, and don’t mention that last year’s mortgage implosion must have had something to do with 2007 low sales in Aug-Nov.
Jim the Realtor | October 15th, 2008 at 8:41 pm“The worst is over, but we’re still not out of the woods,”
For the sake of the entire USA, I hope she’s correct because my definition of “worst” is:
- US Dollar plummets in value
- Inflation runs rampant
- And then who gives a s*** about houses
Is everyone prepared for that outcome?
Tyrone | October 15th, 2008 at 9:25 pmIf you take, for example, Jim’s Carlsbad post a couple of threads down, it’s obvious there is still a lot of bloat in the higher-end homes. I am starting to see what appear to be rather significant cracks in the “immune” areas (mostly anecdotal at this point).
If you think O’side homes going from $500K to $200K was bad, wait until we see the homes going from $1.5MM to $300-400K. That’s when we’ll really see the BIG numbers in price declines.
Of course, there are some who believe the upper-end moves independently from the lower-end. We’re about to see whether or not that is true. The period between 2000-2015+ will re-write how we think about finance and economics in the future, IMHO.
CA renter | October 15th, 2008 at 11:14 pm“The worst is over, but we’re still not out of the woods,” said Leslie Appleton-Young, the association’s chief economist.
Does anybody actually listen to what this person says anymore?
Leslie is a paid for shill that is masquerading as an Economist.
shadash | October 16th, 2008 at 6:25 amThese publicists (I refuse to believe that they are really economists) are like parents talking down to their children. I learned at a very young age whenever a supposedly trusted adult (doctor, dentist) told me that the “worst is over, but we aren’t done yet” that it was code for “stop squirming and crying cause there’s some more pain to come and I just want to get this job over with and move on to the next brat or get to the golf course”
SD_Coastal | October 16th, 2008 at 7:28 am“In summary, my forecast is that if you can find a house you love around $200/sf, you should strongly consider buying it!”
Wouldn’t you have to qualify that statement by area? i.e. do you think it is possible for Carlsbad to revert back to $200/sf?
Simone | October 16th, 2008 at 5:02 pm“Dreamer, you know you are a dreamer
Well can you put your hands in your head, oh no!
I said dreamer, you’re nothing but a dreamer”
-Supertramp
I think that sums it up!
Donya | October 17th, 2008 at 10:22 amJust curious – what was the CAR forecast for 2008 at this time last year?
Curious | October 17th, 2008 at 2:16 pm