In almost any enterprise, a forecast of an increase of 17.5% growth would be cause for a party. But according to the recent Chapman Economic Forecast, Orange County’s single and multiple housing 17.5% estimated permits for 2011 are not enough to offset an otherwise tepid 2011.
The Chapman team is to be commended for sticking its neck out year after year because these forecasts have a low downside. When you’re correct, you get bragging rights, but those never seem to exceed the catcalls when you’re wrong.
In contrast, consider the UCLA Anderson Economic Forecast, which came out in October and predicted a sluggish overall housing market through spring 2011.Things will get better after that, but the forecast was not specific. The UCLA report went as far as to predict a whopping 49% rise in home prices through 2017. But in 2009, the Anderson Forecast predicted a 16% rise in Orange County real estate prices for 2010. Oops.
Statewide, according to the California Assn. of Realtors 2011 California Housing Market Forecast released in October, “Sales in 2011 are projected to increase a lackluster 2% to 502,000 units compared with 492,000 units (projected) in 2010.” The forecast predicts a 2% increase in 2011 median home price to $312,500. “California’s housing market will see small increases in both home sales and the median price in 2011 as the housing market and general economy struggle to find their sea legs,” said C.A.R. President Steve Goddard through the organization’s news release. “The minor improvement in the housing market next year will be driven by the slow pace of recovery in the economy and modest job growth. Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role,” he said.
Another survey, this one national, was even more pessimistic. The results of the survey, conducted by Trulia.com, “a top site for homebuyers, sellers and renters,” and RealtyTrac, “the leading online marketplace for foreclosure properties,” showed weary and wary home sellers and homebuyers.
“More and more, American homeowners, sellers and buyers, are tamping down their expectations for a swift recovery in the housing market and bracing themselves for a long, slow climb back to a healthy real estate market. Fifty-eight percent believe recovery will happen after 2012 and more than one in five U.S. adults believe recovery won’t happen until 2015 or later,” Pete Flint, co-founder and CEO of Trulia, is quoted as saying.
Drill down to the unscientific predictions of individual real estate agents, and 2011 is likely to be fabulous. But that attitude is why these agents remain in the real estate game while others have taken other career paths.
Good or bad, high or low, one concept remains constant: As it was in 2010, next year will be an excellent time to buy a home. And in some areas and for some types of homes, it may even be a good year to sell. In 1987, mortgage interest rates were above 10%. So even if rates increased to 6% next year, borrowing the money for a new home is still a good deal.
Regardless of the prediction you choose to embrace, all of the reputable forecasters agree that the bottom of the market is behind us.
STEVE SMITH is a Costa Mesa resident and a freelance writer. Send story ideas to smi161@aol.com.
