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Home Prices To Increase 20%, Investor Predicts

"My best guess is that California will have significant price inflation. Prices could escalate so strongly that we will think we are in 2004 instead of 2013."

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.

"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."

Norris is slated to share his prediction and the reasons behind it during an appearance tomorrow before the San Diego Creative Investors Association.

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.

Markus December 10, 2012 at 11:08 PM
Liked....
censored messenger December 10, 2012 at 11:15 PM
Nearly half the houses in central Murrieta have renters now, and the neighborhood is getting run down fast. Report all vehicles stored on the street to Code Enforcement. Report any graffiti or any other criminal activity instantly....Renters couldn't care less about the house values, and it shows....
KB December 10, 2012 at 11:42 PM
This could happen, remember the fed is printing at least a 100 billion/month. A lot of that money is still in M1, but should eventually make it to M2. At the same time, the stock market may rise dramatically as well due to inflationary fed policies.
American Girl December 10, 2012 at 11:45 PM
And soon we will get rid of our cars and ride on unicorns too!
American Girl December 10, 2012 at 11:46 PM
Mine is the first house on the market when this happens.
TVOR December 10, 2012 at 11:53 PM
This sucks, the good deals are only around when I am broke.
KB December 11, 2012 at 12:02 AM
When I 1st moved to Temecula the street I lived on was about 90% owners, 10% renters. Fast forward to the present and the numbers have nearly swapped. Is this a normal neighborhood deterioration process or due to the on-going financial crisis or both? I'm still not sure.
One Voice December 11, 2012 at 12:15 AM
I'm with you June, I will be out of here and California as soon as my house goes up.
Mr. Logical December 11, 2012 at 03:40 AM
LOL
Mr. Logical December 11, 2012 at 03:43 AM
When home prices go up 20% there will be a For Sale sign on my front lawn and a U-Haul truck in my driveway.
Theotis December 11, 2012 at 05:04 AM
Love this place.we alls jus needs to makes weed legal a d free
Theotis December 11, 2012 at 05:05 AM
I will buy yer house. mr logical . How much? do it have a car port?
So Cal Smitten December 11, 2012 at 03:40 PM
Try representing a buyer in today's market and you might change your mind. Prices are already going up and there is a shortage of inventory and it is once again a seller's market! For those of you waiting to sell, check with a REALTOR to find out your home's market value. You might be surprised
TVOR December 11, 2012 at 03:57 PM
Investors have snatched up all of the cheap inventory and now deals are scarce. It will be interesting to see if there is a frenzy of buying like before. As long as mortgage companies don't write bad paper it should even out tge market and start a long period of prosperity for those who have property to sell.
GK Halverson December 11, 2012 at 04:01 PM
Do the math people.,20% how is that going to help those home owners that are upside down $200-300,000. They need a40% increase.
DB December 11, 2012 at 04:21 PM
Perhaps those folks should consider their investment talents on future purchases..........
Andy December 11, 2012 at 06:07 PM
Who's your supplier Bruce? That's some really good dope you're smokin' over there!
Reverend Smith December 11, 2012 at 07:49 PM
Same here in Lake Elsinore. People are buying and not selling, but holding on to properties and renting to meth makers, packs or illegals, prostitutes, whoever has the money in this economy. My neighborhood went from quiet and safe to gangland with every renter replacing an owner. Especially true where most of the owners are elderly and dying off. I fear the renters are getting kicked out of (or discovered by the cops) in one location, only to move and blight another neighborhood, making ownership there less attractive too.
Reverend Smith December 11, 2012 at 07:52 PM
The rich get richer, the pool get poorer. The Middle class is dead, and along with it American Dream.
Reverend Smith December 11, 2012 at 07:58 PM
That's the kind of thinking that got us into this economic mess - short term thinking. That 20% increase in prices is just the beginning of the trend. The increase in property worth will continue. Hopefully the days of buy-and-flip madness are over. Expecting to go from downward trend to suddenly seeing a 40% increase is not realistic.
V.W.D.S. December 11, 2012 at 08:12 PM
I believe if you read the article correctly that is exactly what they are talking about. That the investors have created a bump in the market for homeowners due to lack of inventory. They are also talking about those who lost their homes back in 2009/2010 mentioning that the fed's have made a way for them to rebuy - which opens the buying market to those who normally would not qualify. Actually since I bought my home in 2009 I am already up 20%! So another 20% is not only reasonable, but would be very welcome!
V.W.D.S. December 11, 2012 at 08:15 PM
Been in CA my whole life. Have bought and sold many homes for personal use and have made a profit on all of them for as a native, I pretty know the trends and use them to my advantage. Most 'transplants' just don't get it. I'm up already on my last purchase and fully expect to gain more equity in the coming year. It is pretty clear when you look at what is actually for sale out there that inventory is down, prices up. I am strategically planning my next move to include land , and lots of it! Grandpa was my mentor and made millions off cherry fields in northern ca which turned out to be Silicon Valley. You just have to know how to play....
V.W.D.S. December 11, 2012 at 08:18 PM
those that are down that much will have to hold on a little longer but I don't doubt that if they do hold on, that they will break even eventually, however, they should have asked themselves back when the market crashed whether it was worth it to actually hold on - as a personal residence/home, maybe so, but as an investment, they should have jumped ship like everyone else. Donald Trump is not a millionaire because he is stupid and emotional about his investments.
V.W.D.S. December 11, 2012 at 08:28 PM
The good news interest rates are still down, there will be an increase in prices, and buyers. The bad news is congress is attempting to remove the homeowners interest tax deduction 'loophole'. Please let your congressman know that this would significantly impact most homeowners/middle class from recovery, which would also impact our economy from recovery. How many of you use this tax deduction in order to get a 'refund' which you turn around and spend each year, boosting the economy? If they remove this deduction, maybe will owe more taxes as opposed to getting a refund. PAY ATTENTION!
Fade67 December 11, 2012 at 09:44 PM
Chances are most of the individuals that far upside down are the same people that treated the equity in their home equity an ATM.
LBV Collins December 11, 2012 at 11:23 PM
Not only have investors snapped up inventory, but underwater homeowners (who can afford their mortgage) aren't selling... because they're underwater. Both of those factors are pushing up prices. While it's true that new FHA regulations permit foreclosed owners to apply for taxpayer-backed loans after only three years, that's only half the equation. The other half is the lenders. (FHA doesn't lend money... it only guarantees the loans.) I have heard that some lenders won't lend until 5, 6, or even 7 years after a foreclosure. (@Markus: You look familiar...)
Constant Comment December 12, 2012 at 02:20 AM
Yeah Markus, not very original. }~)
LBV Collins December 12, 2012 at 02:26 AM
Exactly, CC!
Constant Comment December 12, 2012 at 10:05 PM
Looks like he changed it.... alls well that ends well......}~)
LBV Collins December 12, 2012 at 10:13 PM
LOL! That's too funny! (Hope I didn't embarrass Markus and guilt him into changing his profile pic. That wasn't my intention.)

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