As 2010 winds down to a close, everyone is turning their attention to what will happen with the housing market in 2011. If there is one constant, it is that the “experts” disagree because of lingering economic uncertainty.
Real Estate is a localized business. California, especially the Bay Area, is a unique market and that is what we need to focus on when looking at trends. For 2010, home sales are predicted to be up 2%. The median sale price is expected to increase 11.5% from a year ago to $306,500.
The 2011 housing recovery in California is expected to be slow and gradual according to the California Association of Realtors. We’re looking for just a 2% or so increase in both sales and prices with any changes in these numbers being driven mainly by the distressed home market. Whereas just a few weeks ago we were looking at a continued freeze on home foreclosures, Bank of America has just announced they are going to continue forward with the process on at least 16,000 homes and that could just be the start of more lenders processing foreclosures.
Where we think the hope lies is that it has now been several years since builders have dramatically slowed down on building new homes. New home inventory is at its lowest level since the housing recession began. It is going to take a long time for construction to meet new home demand and that could put upward pressure on home prices. In addition, new construction will provide jobs which will have a positive impact on the overall economy. How much this offsets the distressed home market will be a key factor.
So while it looks like we’ll be in slow growth mode for the start of 2011, it will be interesting to see what the market looks like as we head into the peak home buying months later in the year.
My personal opinion stays the same – buyers should buy for the long-term and below their means. Sellers should turn to a trusted professional to assess the value of, and market for, their home. Please don’t hesitate to contact me, I can help you!