SANTA CLARA (Oct. 6) – The median price of a single-family home in California will again increase by double-digits next year, reaching $522,930, while sales will decrease slightly from this year's pace to the second best year on record in 2005, according to the California Association of REALTORS® "2005 Housing Market Forecast" released today.
The median home price in California will increase 15 percent to $522,930 in 2005 compared with a projected median of $454,720 this year, while sales for 2005 are projected to reach 603,700 units, falling 2.5 percent compared with 2004. The double-digit gain in the median price of a home, which California has experienced for most of the past four years, will again be fueled by the continuing shortage of housing across much of the state, according to C.A.R. economists. California typically gains nearly 250,000 new households, yet only will build about 200,000 new housing units this year, creating a shortfall of about 50,000 units.
For the full forecast, which includes a PowerPoint presentation, click here.
|Trends at a Glance|
|Sep 04||Aug 04||Sep 03|
|Sale/List Price Ratio:||101.0%||100.7%||98.8%|
|Days of Inventory:||53.6||57.1||73.8|
|Days on Market:||33||31||38|
Home sales gained 5% in September compared to August and were up 0.7% over last September. Both home and condo sales continue on a record-setting pace for the year. Inventory fell 1.5% from August levels and is off 27% compared to last year. This dropped the Days of Inventory indicator to 53.6, keeping it firmly on the sellers' side.
Home prices sagged in September, with the median price dropping 3.7% compared to August. The median price is up 13.8% over last September. The average home price dropped 7.7%, month-over-month, but is up 13.2% year-over-year.
Condo sales, on the other hand, fell 14% from August while the median price gained 9.4% and the average price gained 8.9% and set a new all-time record at $529,613. Interestingly, inventory increased by 14%, which pushed the Days of Inventory number to 40.1.
The sales price to list price ratio rose 0.3 points to 101%.
Days of Inventory decreased 3.5 days to 53.6.
The sales chart below shows the historic inventory versus sales ratio since January 1997. Click on the chart to expand it. To return here, click the back button in your browser.
The chart below tracks the change in median and average prices since January 1998. Click on the chart to expand it.
My advice? For buyers, if you're waiting for prices to drop, don't hold your breath. The California Association of Realtors is forecasting a shortfall of 50,000 homes next year and they expect the median home price to increase by 15%, statewide. If you are a renter, do whatever you can to buy. If you're relocating to the area, buy, don't rent. If you already own a home here, and are comfortable in it, stay put. Don't over extend yourself. Smaller homes will increase in price more rapidly than larger homes. If your family is growing and you need more room, start shopping.
For sellers, if you can move out of the area because you are retiring or can move your business with you, do it. Lock in your gains and move to somewhere like the Coachella Valley. Prices are much more reasonable, and, we expect appreciation there will be higher than in Santa Clara County for the next few years.
Remember, the real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood, call me.
If I can help you devise a strategy, call or click the buying or selling link in the menu to the left.
To view sales statistics for each city in the county, go to the next page. To view the monthly sales and pricing trend charts for individual cities, click on the city in the menu to the left. To view the annual tables and trend charts, click on Annual Trends in the menu to the left.
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