Battered by an economy in crisis with real estate, suffering through record financial losses, unemployment rates ranging as high as 30% and rising bankruptcies . . . California is facing the worst economic downturn since at least the Great Depression.
However, 2010 may find some areas in California's housing market on the brink of a turnaround.
In Los Angeles, pushed by the federal government's first time home buyers' tax credit, home prices are inching up as sales rise. The free-fall in housing prices has seemed to level out somewhat. Unfortunately, the glut of REO properties in the foreclosure pipeline is going to deter and possibly threaten stabilization. As a consequence, Economist are forecasting average housing prices in Los Angles to deflate an additional 8.9% in 2010.
The Inland Empire has been particularly hard hit. Today I am finding a lot of Inland Empire homes being listed based on the false market that is being created by the lack of inventory out here. This lack of inventory is due to the recent REO moratorium and Lender modification efforts.
Typically a Buyer's market results from an excess of supply over demand and a Seller's market results from an excess of demand over supply and will generally garner multiple offers on what little inventory exists. Even though properties are receiving multiple offers, it is clear that it is not a Seller's market, it is still a Buyer's market as evidenced by the lengthy DOM for the higher priced listings.
Even with this slight uptick in pricing and spike in sales, our Inland Empire market is predicted to remain fairly sluggish through the year with a slightly lesser deflation forecasted at 7.5% in 2010.
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