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No Cooling Seen for State Home Prices

Real estate: Study predicts record $269,200 median for single-family dwellings by 2001, an increase of 8.5%.

September 21, 2000|JENNIFER OLDHAM | TIMES STAFF WRITER

The median price of a single-family home in California will hit a record high of $269,200 in 2001 and home sales will fall slightly, according to an annual forecast released Wednesday by a state trade group.

The median price of a single-family home in the state will rise 8.5% next year, according to the report released by the California Assn. of Realtors during its annual meeting in Palm Springs.

Statewide sales of existing single-family homes will fall to 507,750 next year, down 2.7% from a projected 521,750 this year, the report said. Economists attribute the continuing decrease in sales to an anticipated rise in interest rates and ever-worsening affordability.

CAR projects that the median price--or the amount at which half the homes sold for more and half sold for less--of a single-family home will rise to $248,100 this year, up 12% from $221,520 in 1999.

This gain means homeowners will face prices that are about 20% higher in 2001 than they were last year.

The state's median home prices have been accelerating at a rapid rate since 1997. The trend is starting to have a negative impact on the state's economy.

"It certainly is threatening the economic recovery because jobs are leaving the state," said Leslie Appleton-Young, CAR's chief economist.

It's less affordable to buy a home in California than in the rest of the nation, where this year's projected increase in median home price is 5%, less than half California's 12%.

Median home prices for the nation as a whole will hit $137,200 this year and rise 2.3% to $140,300 next year, according to CAR's forecast.

Double-digit home price appreciation in California threatens to lock more residents out of the already fast-paced housing market here. First-time home buyers have been hit particularly hard by the run-up in prices.

"Home values have appreciated to such an extent that income growth has not kept pace, and that will shut out a lot of buyers," Appleton-Young said.

The rise is expected to put further pressure on the state's already tight inventory levels. There's only a four-month supply of inventory on the market today, when a 10-to-12-month supply is considered healthy, Appleton-Young said.

This lack of inventory continues to be a headache for area Realtors, who say they have a tough time maintaining an inventory of desirable homes.

"The good properties are going fast," said Alison McCormick, senior sales associate at Coldwell Banker's Newport Beach office. "If it's something that's turnkey . . . there are bidding wars."

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