California: Median Prices Expected to Top $523,000

REALTOR® Magazine Online
The California Association of REALTORS®' latest housing outlook calls for the statewide median price to hit $523,150 by the end of 2005, up 16 percent from last year.

Not surprisingly, the group expects the Housing Affordability Index to fall to 16 percent this year from 20 percent in 2004, meaning that only 16 percent of residents who earn the state's median income can fit a median-priced home into their budgets.

CAR chief economist Leslie Appleton-Young believes a drop in mortgage rates will make it easier for buyers to handle soaring home prices. However, she notes that the flood of buyers rushing to take advantage of low interest rates are encountering supply constraints, driving prices even higher.

The CAR forecast also anticipates a 1.4-percent jump in single-family resales to an all-time high of 633,490 from 624,740 over the same time span.