Median home prices in California will be up by 20 percent this time next year, a Riverside-based real estate investor said today.
Bruce Norris, founder of the Norris Group, said tight inventory, government money and temptingly low interest rates will all combine to invigorate the Golden State's housing market in 2013.
Norris is slated to share his prediction and the reasons behind it during an appearance tomorrow before the San Diego Creative Investors Association.
"My best guess is that California will have significant price inflation," Norris said. "Prices could escalate so strongly that we will think we are in 2004 instead of 2013."
According to the property speculator, his forecast follows accurate predictions made in 1997 -- for a sizzling residential real estate market -- and 2006, when he foresaw a precipitous decline in home prices, warning clients to cover their interests.
Norris said that in many locations, there is a one-month supply of residential properties for sale, with investor-owners keeping most of their stock as lease-only. That affords "normal sellers with equity" the opportunity to ratchet up prices in response to demand, according to Norris.
He said further upward pressure on prices will start to come from delinquent borrowers who lost homes in the 2008-09 crash. Because new Federal Housing Administration regulations permit owners who lost properties to foreclosure to apply for taxpayer-backed loans after only three years, would-be mortgagors with questionable credit can get back into the market.
"Fast forward to 2012, and you now have those same people ready and capable of buying a home again," Norris said. "Buyers have realized that their house payment would be less than their rent, and that's fueling demand and pushing up home prices."
According to Norris, rock-bottom interest rates will add to the home financing frenzy.
In its "2012 Annual Housing Market Survey," the California Association of Realtors noted that the low number of available homes had created "fierce market conditions," where multiple offers and bidding wars were becoming the norm.
In a presentation to the Riverside County Board of Supervisors in May, a trio of economists predicted slow but steady home price appreciation in the inland region over the next two years, in contrast to Norris' forecast.