California Housing Market Will Take Time to Recover
Ken Rosen, chairman of the Fisher Center for Real and Urban Economics at UC Berkeley believes it may take three years for the California housing market to recover. The main reason being that housing prices have well-surpassed salaries in California. He believes that it will take three to four years for incomes to catch up with housing prices.
Rosen is forecasting that the median price of an existing home in California will fall 4.8% in 2007 and 2.9% in 2008. That would mean a drop of nearly $30,000 in the price of a Bay Area home next year. If prices were to drop more dramatically, it is believed that the recovery process would be sped up by more buyers jumping into the market. Until that happens, the conservative estimate remains at a three year recovery period.