Home prices in California will increase slightly next year as buyers snap up foreclosures and other properties at the market's low end, the California Assn. of Realtors said Wednesday.
At the same time, the number of purchases will decline slightly because there will be fewer foreclosures available.
In its annual forecast, the Realtors group predicted that the median home price in California would rise 3.3% to $280,000 next year. Sales of houses and condominiums, it said, will decrease 2.3% to about 527,500.
"We forecast that sales would be off a little bit next year because we're scheduled to lose first-time home buyers' tax credit at the end of November," said Leslie Appleton-Young, the group's chief economist.
Her group is calling for an extension of the federal tax credit, which benefited more than 1 million home buyers this year, and to make it available to all buyers.
"Expanding credit through at least part of 2010 would help an economy that's still trying to get back on its feet," Appleton-Young said.
There are two markets, she said.
In the moderate to low-end market, home prices have dropped 50% or more in some places, enabling people to buy homes that they otherwise would not have been able to afford, Appleton-Young said. In the high-end market, however, prices haven't softened, but potential buyers have less money.
The forecast says sales will be driven by distressed properties in the low end of the market, causing a shortage in the number of homes for sale at that level and a moderate home-price appreciation. It will continue to be hard to sell higher-priced houses because values have dropped and financing is hard to get.