C.A.R.'S 2005 FORECAST CALLS FOR DOUBLE-DIGIT PRICE INCREASES, MODERATING SALES
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 C.A.R.'s "2005 Housing Market Forecast" released today at California REALTOR® EXPO 2004 in Santa Clara.
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. Home sales for California in 2004 are expected to reach a record 619,300 units, surpassing the prior sales record of 601,770 set in 2003, according to C.A.R. economists.
"We expect the economy in 2005 to generate modest growth in jobs both nationally and here in California, while productivity gains and competition will likely keep inflation in check next year, " said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "While the increase in interest rates will be enough to moderate the pace of home sales in 2005, population and household growth will continue to put pressure on home prices, resulting in greater price appreciation in California compared with the nation."