Real estate forecast for Santa Clara County

5/13/2010

I attended a presentation today from one of the economist at the California Association of Realtors (CAR). Here is a summary of his forecast for Santa Clara County.

Home prices in Santa Clara County for the remainder of 2010 are expected to be flat to slightly down but should start edging higher in early 2011.
Interest rates are expected to continue to be low on a historical basis although they are expected to rise by the end of the year. 30 year fixed rate is not expected to rise above 6% in 2010. Low interest will support the housing market. Interest rates are not expected to rise to early 1980 levels of 15 - 18% since inflation is not a material factor in our economy.
Distressed sales will continue to be a smaller share of total sales going forward. The government has put in place a number of programs to encourage loan servicers, lenders, home owners and investors to work out loan modifications or short sales.
Most of California is ahead, along with Santa Clara County, of the national housing markets.
Resets of subprime and Alt-A loans will continue to have a diminishing impact. The prediction of a apocalypse a few years ago has not materialized.