According to the California Association of Realtors (C.A.R.), the California residential real estate market in 2005 will be one for the records. In 2005 we eclipsed the annual sales and median home price records set in 2004
Here are some highlights from the past year and a look ahead:
The median home price of single family homes in California passed the $500,000 mark for the first time in April of 2005. The annual median is expected to reach $523,150 and increase to $573,000 in 2006. That alone is an increase of over 10%.
The use of the internet by homebuyers and sellers continued to climb in 2005. The percentage of homebuyers using the Internet increases from 56 % in 2004 to 62% in 2005.
The share of sellers who use the Internet in their home selling process surpassed 50% for the first time, rising from 47% in 2004 to 57% in 2005, according to C.A.R.’s “Survey of California Home Sellers”.
Home inventory levels are expected to rise slightly in 2006 but will remain low by historic standards. This will fuel continued price appreciation in the California market. Homes were on the market for an average of 3.3 months in 2005.
In 2005 more homeowners extended themselves financially by using alternative loan products. This was due to home prices reaching record levels. The last time more than 40% of homebuyers used adjustable – rate loans was in 1994.
The sales activity for 2006 is expected to rise. David Lereah. The national Association of Realtor’s chief economist, said that market conditions are still favorable for housing. “The slowdown amounts to a tapping of the breaks on a hot market,” said Lereah. “Home sales are coming down from the mountain peak, but they will level-out at a high plateau – a plateau that is higher than the previous peaks in the housing cycle.
This transition to a more normal balanced market is a good thing.
