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The real-estate market has improved significantly over 2007 and 2008, which are thought by many to be the worst real-estate markets in 50 years. If someone had told you in 2005 that home prices would be down 35% to 40% and mortgage rates would be under 5% in 2010, you most likely would have thought they were crazy. But that is exactly the case, and we are still in what could be considered a very mediocre real-estate market at best. Why is this, and what will 2011 bring?
The California Association of Realtors® (CAR) forecasts a modest 2% increase in sales in 2011. CAR also forecasts that the median price of homes will rise 2%, from $306,500 to $312,500. Good news is likely to continue for mortgage rates as they are forecast to be in the 5.1% range. The Consumer Price Index (CPI), which tracks the cost of goods and services, is projected to stay in the 1.3% range, which is very low. These are factors that could suggest a very hot real estate market. However, high unemployment rates; European debt problems; and unrest in North and South Korea, Sudan, the Middle East, and Afghanistan will more than likely keep the real estate market from overheating any time soon.
With interest rates low, a modest appreciation forecast, and ample inventory, 2011 will continue to be a time of opportunity for first-time homebuyers and move-up buyers. While some may wish for a more vibrant real-estate market, there is a lot to say for modest growth. In any event, 2011 should be an interesting year for California real estate. |
