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C.A.R.'S 2008 CALIFORNIA HOUSING MARKET FORECAST
Home prices throughout most of California will post modest declines next year while sales of existing homes will stabilize from the precipitous decrease experienced in 2007, according to C.A.R.'s "2008 California Housing Market Forecast" released today.
The forecast was presented this afternoon during the CALIFORNIA REALTOR® EXPO 2007, running from Oct. 9-11 at the Anaheim Convention Center in Anaheim, Calif. The trade show attracts nearly 12,000 attendees and is the largest state real estate trade show in the nation.
The median home price in California will decline 4 percent to $553,000 in 2008 compared with a projected median of $576,000 this year, while sales for 2008 are projected to decrease 9 percent to 334,500 units, compared with 367,500 units (projected) in 2007.
"Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year," said C.A.R. President Colleen Badagliacco. "Now is not the time for homeowners to test the waters, only serious sellers should put their homes on the market in what will continue to be a challenging sales environment."
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 FED LOWERS KEY INTEREST RATE 0.25 PERCENT
The Federal Reserve lowered its key interest rate by one-quarter percent today, pushing the federal funds rate down to 2 percent, its lowest level since 2004, in an effort to ease economic pressure coming from higher food and energy costs, a weakened dollar, and the ongoing housing slowdown and credit liquidity crunch.
"Recent information indicates that economic activity remains weak," the Fed said in announcing the cut. "Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters."
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PENDING HOME SALES UP 0.6 PERCENT
Pending contracts for home sales in October rose modestly by 0.6 percent to 87.2 from an upwardly revised index of 86.7 in September, according to NAR's Pending Home Sales Index released Monday. The increase marks the second-consecutive monthly gain, but remains 18.4 percent below the October 2006 index of 106.8.
"Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels," Lawrence Yun, NAR's chief economist.
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