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The 2010 year has ended on a down-note. Number of units sold has fallen a bit from the year before. This, according to the California Association of Realtors as reported in the Sacramento Bee HERE. They also expect prices to continue to rise, albeit slowly.

There are several reasons for the slow market, including:

1. Expected increase in interest rates
2. A large backlog of foreclosures still looms ahead
3. The “strategic default” is becoming more the norm
4. Lending standards are continuing to tighten

In fact, these are the rationale for the case of prices continuing to FALL through the rest of the year. HERE is a report from the website suite101.com to iterate these points.

It is important to know that real estate is still a largely LOCAL market. That is, national indices rarely portray what is happening in any given local market. Sacramento is no exception. A report from Clear Capital HERE shows a forecast for many major metro areas, including Sacramento where the expectation is a 3.1% decline for 2011 after a mere 1.4% decline in 2010. By comparison, San Francisco showed an increase in 2010 of .9% but the forecast shows an expected 9.3% drop for this coming year.

So, which way will it go? As I’ve said, before, “If we knew where the prices were going, they’d already be there.” Clearly the ramifications of the current financial crisis are still a long way from having been “played out”, there will be other shoes to drop.  And, it is this uncertainty that will continue to put pressure on the real estate market and, eventually, the stock market, as well.