UCLA economists forecast today that Orange County will have a $500,000 housing market again, but not for five years.
The UCLA Anderson Forecast for Orange County projects that home prices, which once grew at a 25% pace, will fall 9% next year and rise only by 3.5% to 6% over the following four years. The price is projected to reach $523,563 in 2013.
Still, the UCLA economists are calling a bottom to the market: Summer of 2009.
“Prices,” said UCLA Anderson Forecast Senior Economist Jerry Nickelsburg, “will begin stabilizing in “middle-to-late 2009.”
Mortgage defaults and foreclosures are expected to reach their peak this year and begin diminishing next year. As foreclosures drop, home prices will stabilize and fire sale prices for foreclosed homes will no long depress neighborhood home values.
Existing inventory of for-sale housing has declined from 22 months of sales a year ago to eight months, the forecast reported.
The report notes that during the first six months of 2008, 38 of the 39 areas examined experienced a decline in median prices for existing single-family homes.
Laguna Beach is the only area with positive price appreciation this year, with the median value up 1.7%, the forecast said. The biggest price drop this year so far was in Capistrano Beach, where the median fell 45.2%, followed by Santa Ana (-36.9%), La Habra (-29.6%) and Anaheim (-29.4%).
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