Realtor's predictions for 2006

Good Morning,
In what could be the state's last hurrah in the current housing cycle, the 2005 California market blew past many previous records. Next year, however, will likely tell a different story. Prices are expected to continue to increase but sales will tumble according to the California Association of Realtors (CAR).
"The California residential real estate market in 2005 will be one for the record books," the association reported.
• When the year is up sales of single-family detached homes should reach 635,000 up nearly 2 percent above last year's record of 624,700. However a 2 percent sales decline will make 2006 the third best year on record for sales in the Golden State.
• After crossing the half-million dollar median price threshold in the spring, home prices will move up to $523,150 before the New Year and continue on for another 10 percent in 2006 to $573,500.
• The slow down in the rate of home price increases is already apparent. The median price rose from 18 to 21 percent in the three years prior to 2005 when they rose only 16 percent.
• California home buyers responded in droves with alternative and riskier loan products to cope with record high home prices. Adjustable-rate and hybrid loan holders were only 11 percent of the state's market in 2003 but a whopping 43 percent in 2005 -- higher than that percentage has been since 1994. Fixed-rate mortgage (FRM) holders went the other way as the percentage of buyers choosing fixed-rate loans dropped from 89 percent in 2003 to 57 percent in 2005.
• The interest rate in California and elsewhere for a FRM remained below 6 percent for much of 2005, only surpassing 6 percent in the last months of the year. For all of 2005, the FRM averaged 5.8 percent. In 2006, the interest rate for the FRM is projected to increase but remain low by historic standards in the low- to mid-6 percent range. Other forecasts say the FRM could go as high as 7 percent.
• The interest rate for a one-year adjustable-rate mortgage (ARM) averaged 4.5 percent in 2005, finishing just over 5 percent at year-end. The interest rate for the one-year ARM is expected to remain within the low- to mid-5 percent range during 2006, but some analysts say the one-year home-buying tool could all but disappear in the face of rising rates.
• The single-family conforming mortgage loan limit rose from $359,650 in 2005 to $417,000 in 2006, and that could benefit more than 28,590 families in California. Unfortunately, the median price of a home in California is 29 percent higher than the new loan limits and 19 of the state's counties have a median price above the new limits.
• Home of the technology mecca known as Silicon Valley, California increased its share of sellers who used the Internet in their home selling process reaching a record 57 percent, up from 47 percent in 2004.
• The percentage of home buyers and sellers who used the Internet increased from 56 percent in 2004 to a record 62 percent in 2005.

Silver leads gold

For the 19th consecutive "year," Nevada topped the nation as the fastest growing state. But this time, the race was closer than it has been in ages. The Silver State's population increased by 3.5 percent between July 1, 2004 and July 1, 2005, according to the latest Census Bureau figures. But Arizona was right behind, with a growth rate of just under 3.5 percent for the same period.
Overall, the country's population rose by 2.8 million people -- 0.9 percent -- to 296.4 million. And as usual, the South and West monopolized the list of fastest growing states.
After Nevada and Arizona, the fastest growers were: Idaho, 2.4 percent; Florida, 2.3 percent; Utah, 2 percent; Georgia, 1.7 percent; Texas, 1.7 percent; North Carolina, 1.7 percent; Delaware, 1.6 percent, and Oregon, 1.4 percent. This was Oregon's first time on the top ten list, edging out New Mexico, which recorded a 1.3 percent population gain.
Regionally, the South now accounts for 36 percent of the nation's population; the West, 23 percent; the Midwest, 22 percent, and the Northeast, 18 percent.
California remains the country's most populous state with 36.1 million people. Texas is second with 22.9 million residents and New York is third with 19.3 million.
In numerical terms, though, just five states -- Florida, Texas, California, Arizona and Georgia -- accounted for more than half the country's population growth in the 12-month period. Florida's population grew by 404,000 people -- nearly 111 a day -- while Texas's grew by 388,000. California gained 290,000 people, while Arizona grew by 199,000 and Georgia increased by 154,000.
As of July 1, according to the Census Bureau, just 10 states accounted for 54 percent of the country's population. California (36.1 million) is the only one in the top ten in the West. The other nine are evenly divided between the South -- Texas (22.9 million), Florida (17.8 million) and Georgia (9.1 million), the Midwest -- Illinois (12.8 million), Ohio (11.5 million) and Michigan (10.1 million), and the Northeast -- New York (19.3 million), Pennsylvania (12.4 million) and New Jersey (8.7 million).
Several states lost population during the 12-month period. New York's population fell by 26,000, while Massachusetts' dipped by 8,700. Rhode Island lost 3,700, as did the District of Columbia.
North Dakota was nearly static, gaining just 369 people, the smallest numerical change in the latest survey.

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