Real Estate Report: What’s Going On In the Housing Market?

Real Estate Report: What’s Going On In the Housing Market?

Pat Colburn

The uncertainty of the European economy, sluggish new housing starts, and flat job growth are the top issues affecting our housing market, according to Leslie Appleton-Young, vice president and chief economist for the California Association of Realtors.

In her presentation to local Realtors on Monday afternoon, Appleton-Young noted that the California housing market is doing much better than that of the U.S. in volume as well as price, although affordability is more limited in California than in the rest of the nation. Mortgage rates are at a 50-year low, which is great - if a buyer can qualify.

More than 30 percent of California homes are currently submerged in negative equity while another four-plus percent are nearing the water’s edge.

She cited another interesting statistic from a recent CAR survey. In response to the question, “Do you think home prices in your neighborhood will go up, down or stay flat in one year, five years and 10 years?” over 60 percent of the sellers surveyed thought the prices in their neighborhood would go down, while 30 percent thought they would remain flat and 10 percent thought they would improve. Sixty percent of the buyers, on the other hand, were unsure, while 30 percent thought prices would remain flat and 10 percent thought they would improve. This is not surprising since most sellers think their homes are worth more than what a comparative market analysis reveals.

Appleton-Young forecast mortgage rates to remain low through 2014. She said the worst of the recession is over and observed that the European economic crisis and U.S. policy issues will be the largest wild cards impacting real estate.

Although her presentation was full of graphs, they were primarily as of August 2011 and covered California and the nation. My next blog post will include a current market analysis of Alameda’s existing home sales.