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Date: 10/15/2008
Authors: Daniel Taub

News Bite

California Home Prices Likely to Dip 6% Next Year, Realtors Say

Home prices in California will drop 6 percent next year after falling about 32 percent this year, as foreclosed houses jam the market and the credit crisis makes it difficult for prospective homebuyers to obtain mortgages.

The median price for detached, single-family homes in the most populous U.S. state likely will drop to $358,000 next year from an estimated $381,000 this year, the California Association of Realtors (CAR) said in its newly released annual housing forecast. The number of homes sold likely will rise 13 percent to 445,000 next year, following a 12 percent increase this year.

The group's forecast for next year is based on the assumption that the U.S. financial system and overall economy has a weak first half of 2009 and improves in the second half, according to CAR.

A year ago CAR projected that prices would decline only 4 percent to a median $553,000 this year. That's about 45 percent above the group's revised forecast for this year. Last year's forecast was made before the availability of jumbo loans plummeted, cutting the number of higher-priced homes sold, according to the trade group.
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