California home prices expected to further increase

08:18, October 09, 2009      

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Housing in California has become a tale of two markets, with the median home price expected to increase while home sales projected to fall, a realty firm said on Thursday.

The median price in California will increase 3.3 percent in 2010 from this year's level, but home sales will dip 2.3 percent, the Los Angeles-based California Association of Realtors (CAR) said in the group's 2010 California Housing Market Forecast.

The median home price in the state will increase to 280,000 U.S. dollars next year, up from 271,000 this year. Home sales, however, will drop to 527,500 units in 2010, down from a projected 540,000 units this year, according to the forecast.

"California's housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market," said CAR President James Liptak. "This follows two years of double-digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace."

Liptak said the sharp drop in home prices combined with near-record-low interest rates made home buying particularly attractive this year for first-time home buyers. He also noted that the federal tax credit helped more than one million first-time buyers purchase homes, and he urged Congress to extend the credit and expand it to all buyers.

"Housing in California has become a tale of two markets," Liptak said. "The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of home buyers to secure financing as well as their concerns about where prices are headed.

"While demand from first-time buyers for low-end properties will continue throughout next year, sales could be impacted if discretionary sellers do not return to the market by the second half of 2010," he said.

Source: Xinhua
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