Expect more declining sales

The rate of home price appreciation will post a modest decline next year following several years of steep increases, while the sales pace will decrease as the market stabilizes throughout 2007, according to C.A.R.'s "2007 California Housing Market Forecast," presented this week during the California REALTOR® EXPO 2006, running at the Long Beach Convention Center. The median home price in California will decline 2 percent to $550,000 in 2007 compared with a projected median of $561,000 this year, while sales for 2007 are projected to decrease 7 percent to 447,500 units, compared with 481,200 units (projected) in 2006.

"Although the 2007 sales decline is not expected to be as steep as what we experienced this year, the psychology of the market -- matching the differing expectations of sellers and buyers -- will continue to be a factor as REALTORS® help consumers navigate their way through a changing market," said C.A.R. President Vince Malta. "While we're projecting a modest decline in the median price of a home, over the long term, residential real estate in California has been and will continue to be a solid investment. Since 1968, the long-term average price appreciation is 9.1 percent."

"While we recognized that the frenetic sales pace of the past four years could not continue indefinitely, the housing market in 2006 did not fare as well as we initially expected," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "The anticipated slowdown that began in October 2005 was heightened by dual natural disasters in the Gulf Coast, a significant drop in consumer confidence, rising energy and raw materials costs, and a series of Federal Reserve interest rate hikes that began in June 2004. Fixed-rate mortgages also hit and passed the psychological threshold of 6 percent, while adjustable-rate mortgages passed 5 percent, ultimately causing a decline in affordability. Affordability concerns also will continue to constrain sales for many households in California throughout 2007, especially for first-time home buyers."

"Homes sales and prices slide"

For the first time all eight counties in the Sacramento Region reported fewer sales and lower sales prices than a year earlier. A recently released report from DataQuick Information Systems analyzed home sales for September and reported the following:

Placer County has been the hardest hit with declining home prices. The median price of a home in the region’s fastest growing county dropped 14 percent to $437,000 from $510,000 in September of 2005. Sacramento County home values declined 7 percent from $384,000 in September of 2005 to $357,000 last month.

It was the first month that the median home prices dropped in El Dorado County. The county’s median in September was recorded at $469,000 down from September of 2005 when it was at $496,000, a decline of 5.4 percent.

Yolo County’s median price is now at $402,000 a 12 percent decline from last year same month. Yuba’s median declined 6 percent now at $305,000. Amador County’s median is now $326,000, a slight decline from last year and Nevada County’s median stands at $464,000 a 2.3 percent drop from September of 2005.

There were a total of 3,558 homes and condos sold in the eight county region during the month of September. That was 2,328 fewer than sold during September of 2005.

The total number of existing homes for sale is declining slightly and may be some good news for sellers. The regional inventory of homes for sale peaked in July with 15,474 and fell to 14,901 in September. If declining inventory continues through the fall and winter the spring housing market will be warmer.