Media Releases

RELEASE DATE:
November 7, 2006

CONTACT:
Greg Berkemer
760) 346-5637
(Media Only) John Hussar
PRNewsWorks (760) 567-8073

PALM DESERT (Calif.) - Home sales and prices will plateau over the next 18 months, thanks to a strong national economy, predicts the chief economist for the California Association of REALTORS®. "Anyone buying a home and plans to stay there four or five years is just fine. A house is not a day-trading asset," Leslie Appleton-Young said in her 2007 Real Estate Market Forecast to about 500 REALTORS® and real estate industry representatives Nov. 2 at the JW Marriott Desert Springs Resort and Spa.

The annual event is sponsored by the California Desert Association of REALTORS® . CDAR President Desiree' Otero introduced Appleton-Young.

"Leslie's forecast illustrates how we must work with our clients to understand the changing market and to set their selling prices accordingly to market conditions," Otero said. "Activity is definitely picking up now."

Appleton-Young said the housing market is undergoing a cyclical adjustment from a four-year boom that could not be sustained forever. "We were all telling ourselves last year, this (red hot market) can't last forever."

In Riverside County, home sales dipped nearly 18 percent through August, compared to a year ago. However, the median price at $416,000 is up about 3.2 percent compared to the same period.

The median home price in California will likely 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, according to the annual CAR forecast.

"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," Appleton-Young said. "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.

"Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole," Appleton-Young said. "That also holds true for several second-home markets, including the desert areas of Southern California and the Wine Country."

The California Desert Association of REALTORS®, The Voice for Real Estate® for the Coachella Valley, represents more than 4,000 estate professionals from Palm Springs to Coachella.

For more information, please call (760) 346-5637 or visit online at www.CalDesertRealtors.com