Jeremy Marginson Mortgage Consultant

The latest forecast from Beacon Economics — which features economist Chris Thornburg, an early seer of the housing debacle — suggests that the recent lull in California home sales is temporary, that the market won’t revert back to its in-collapse mode and that modest appreciation for values is in the cards.

“Fears over a major double dip in home prices are likely misplaced. While demand for homes has fallen (as measured by home sales) since the homebuyer tax credit expired, and there has been some weakness in prices as a result, the fundamentals all indicate that California’s real estate market is emerging from this recession in a healthier position,” Beacon wrote.

Beacon notes that Juy’s sharp drop in statewide homebuying was expected; its negative meaning “exaggerated;” yet “Real estate in California will remain weak over the next year.”

Beacon projects flat home pricing statewide through 2011 then approximate gains in the California median selling price of roughly 3% in 2012; up 5% in 2013; up 7% in 2014 and increases of nearly 8% in 2015.

“By 2015, median prices will be back in the $300,000s — well below the 2006 peak, but providing a much more sustainable platform for growth,” Beacon writes. “California’s housing markets weathered a bad storm, but growth — slow growth –is on the horizon.”

Why? Beacon explains:

“Home prices have returned to their long-run, and far more sustainable, trend of roughly 6-times per capita income. This is not to say that the downturn has not wreaked havoc on the balance sheets of many Californians, who saw their primary asset (their home) fall in value by an average of 57% between the 1st quarter of 2007 and the 2nd quarter of 2009. … It is also important to point out that while some indicators, like the affordability of homes given current incomes, show that the market is returning to fundamentals, there are many problematic issues remaining. The primary one is the number of distressed mortgages remaining in the system.”