RE News

C.A.R.'s California Housing Market Forecast for 2008:Statewide median price down, pace of sales decline moderates after tumultuous 2007

LOS ANGELES (Oct. 10) – Home prices throughout most of California will post modest declines next year while sales of existing homes will stabilize from the precipitous decrease experienced in 2007, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) "2008 California Housing Market Forecast" released today. The forecast will be presented this afternoon during the CALIFORNIA REALTOR® EXPO 2007 (www.realtorexpo.org), running from Oct. 9-11 at the Anaheim Convention Center in Anaheim, Calif. The trade show attracts nearly 12,000 attendees and is the largest state real estate trade show in the nation.

The median home price in California will decline 4 percent to $553,000 in 2008 compared with a projected median of $576,000 this year, while sales for 2008 are projected to decrease 9 percent to 334,500 units, compared with 367,500 units (projected) in 2007.

“Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year,” said C.A.R. President Colleen Badagliacco. “Now is not the time for homeowners to ‘test the waters’ – only serious sellers should put their homes on the market in what will continue to be a challenging sales environment.”

“Sales could decline more steeply in 2008 if the current liquidity crunch in the mortgage markets has a longer-than-expected duration or if interest rates unexpectedly increase,” she said

“Geographically, more affordable regions such as the Central Valley and Inland Empire will experience greater softness in the resale market because of the large number of new homes coming onto the market in recent years,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Higher priced regions of the state, such as the San Francisco Bay Area and parts of San Diego, Los Angeles, and Orange counties will react more to affordability constraints.”

“By price-range, the highest-priced markets – those with medians over $1 million -- will show less stress,” she said. “The lower-priced markets will continue to face fallout from the subprime crisis, tighter underwriting standards, and competition from new home developments where price-cutting has been even more severe.”

C.A.R. economists also projected a 23 percent decline in sales this year to 367,500 units compared with 2006, and a 3.5 percent increase in the statewide median price to $576,000. However, the projected increase in the 2007 statewide median stands in contrast to the situation in most counties, regions, and communities of the state, where slight to modest year-to-year percentage declines have become more prevalent and will continue next year.

Historically, the last time the sales level fell below 2007’s projected 367,500 units occurred in 1995, when annual sales totaled 342,540 units. Sales last fell below 2008’s 334,500-unit forecast in 1985, with 328,270 units. The last time the statewide median price fell was a 0.5 percent decline in 1996. The most recent statewide median price decline greater than 4 percent was a 4.5 percent decline in 1993.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

2008 FORECAST FACT SHEET

	Actual				Forecast
	2003	2004	2005	2006	2007f	2008f
SFH Resales (000s)	601.8	624.7	625.0	477.5	367.5	334.5
% Change	5.1%	3.8%	0.04%	-23.6%	-23.0%	-9.0%
Median Price ($000)	$372.7	$450.8	$524.0	$556.6	$576.0	$553.0
% Change	17.9%	20.9%	16.2%	6.2%	3.5%	-4.0%
30-Yr FRM	5.8%	5.8%	5.9%	6.4%	6.5%	6.5%
1-Yr ARM	3.8%	3.9%	4.5%	5.5%	5.5%	5.2%

PRICE VARIABILITY IN REGIONAL MARKETS

C.A.R. REGION	Peak Month	Peak Price	Aug-07 Median	% Chg From Peak
Northern California	Aug-05	$440,420	$370,390	-15.9%
Sacramento	Aug-05	$394,450	$332,510	-15.7%
Central Valley	Aug-05	$363,680	$309,740	-14.8%
High Desert	Apr-06	$334,860	$287,390	-14.2%
Riverside San Bernardino	Jan-07	$415,160	$377,130	-9.2%
Northern Wine Country	Jan-06	$645,080	$600,000	-7.0%
Ventura	Aug-06	$710,910	$669,870	-5.8%
Orange County	Apr-07	$747,260	$710,380	-4.9%
San Diego	May-06	$622,380	$595,070	-4.4%
Palm Springs/Lwer Desert	Jun-05	$393,370	$377,920	-3.9%
San Luis Obispo	Jun-06	$620,540	$598,400	-3.6%
San Francisco	May-07	$853,910	$832,760	-2.5%
Santa Clara	Apr-07	$868,410	$860,000	-1.0%
Monterey Region	Aug-07	$798,210	$798,210	0.0%
Los Angeles	Aug-07	$605,300	$605,300	0.0%

C.A.R. reports sales decrease 27.8 percent in August, entry-level median home price falls 5. 1 percent

LOS ANGELES (Sept. 25) – Home sales decreased 27.8 percent in August in California compared with the same period a year ago, while the median price of an existing home increased 2 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

"Despite the overall increase in the statewide median price, prices declined in 11 regions last month, falling 11.5 percent in the Central Valley region and 12.1 percent in Sacramento," said C.A.R. President Colleen Badagliacco. "Price softness is even more pronounced when we look at different segments of the market. For example, the statewide median price in the entry-level price range of less than $500,000 fell 5.1 percent in August to $349,360 compared with $368,210 for the same period a year ago.

"The median price per square foot for a single-family home is also on the decline, falling 4.3 percent this year to $336 compared with last year’s record high of $351 per square-foot," she said.

Closed escrow sales of existing, single-family detached homes in California totaled 319,200 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 27.8 percent from the 442,150 sales pace recorded in August 2006.

The statewide sales figure represents what the total number of homes sold during 2007 would be if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during August 2007 was $588,970, a 2 percent increase over the revised $577,300 median for August 2006, C.A.R. reported. The August 2007 median price increased 0.5 percent compared with July’s $586,030 median price.

"While low affordability, tighter underwriting standards and expectations of lower prices continue to pose challenges for the market, the decline in sales accelerated in August as a result of the so-called credit or liquidity crunch that began in July.," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "The credit crunch emerged as uncertainty about the extent of the subprime problem drove investors across the globe to turn off the tap of funds to lenders in mortgage and other credit market segments. With credit drying up, even qualified buyers were unable to receive funding for home purchases."

"We expect the impact of the credit crunch to play out over the next several months, and that it will continue to negatively impact sales," she said.

Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORSâ throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for August may be exaggerated due to compositional changes in housing demand.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.