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Orange County Home Prices Expected to Rise Next Year

Orange County homes are seen to increase a slight 0.84% by January 2011, a bit of a letdown after experts predicted an annual upward pace of 2.6% last December but still encouraging considering the rough year other upscale areas have had to endure.

The data was provided by First American CoreLogic, which provides monthly forecasts on pricing for major counties. The latest report also showed that countywide home sales, including short sales and other distressed listings, were up 1.69% from last year. Minus distressed sales, home sales were up 0.99%.

The year-over-year changes are a definite improvement from December, when home sales were down during the last 12 months. Back then, buyer activity fell 0.55% for all homes, and was down 2.24% with distressed home sales counted.

However, the expected increase has definitely slowed down from the second half of 2009. First American predicted a 9.53% annual gain back in August, a 10.94% rise in September, and a further 6.8% up in October. Forecasts then went the opposite way, with a decrease of 1.18% predicted in November.

Nationwide, the company expects home prices to increase by 5.6% over the next 12 months. Counting distressed sales, the figure drops slightly to 4.5%, although experts still see it as a positive sign towards market stability.

Specialists point out, however, that the First American surveys omit two important factors: the shadow inventory of foreclosures expected to surface in the coming months, and the expiration of the government's home buyer tax credit in April which has stimulated much of the recent buyer activity.