Realtors Group Forecasts Price Declines in 2008

for-sale-sign.jpgThis story in the Los Angeles Times about the California Association of Realtors’ annual convention reveals that the group is forecasting lower home prices next year.

The median price of an existing California home is expected to decline 4% to $553,000 in 2008, compared with a projected median of $576,000 this year, said Leslie Appleton-Young, the group’s chief economist….The volume of home sales is projected to fall 9% in 2008 — which actually would represent an improvement. Sales fell by 24% last year, and are projected to tumble 23% this year.

Appleton-Young acknowledged that she underestimated the severity of the current downturn. In a two-year forecast in 2005, “I predicted a soft landing and a modest decline in sales,” she said. “Well, it’s been far from modest.”

So far, the market slowdown has hit lower-priced areas hardest.  But that is expected to change.

…[Appleton-Young] warned that even higher-priced markets, including Los Angeles, Orange County and the San Francisco Bay Area, where prices continue to appreciate and sales have been more robust, would start to show signs of stress, but to a lesser extent.