This is the time of the year that economists roll out their predictions for the year ahead, but given the accuracy of 2008's numbers you might wonder whether they should even bother. The California Association of Realtors, just out with its forecast, expects state home prices to fall 6 percent in 2009, which sounds hopeful until we discover that a year ago the CAR was projecting only a 4 percent drop, to a median price of $553,000. It was a tad off (prices plummeted more than 30 percent). From Bloomberg:

"I don't think that we're going to see price stabilization in the statewide median home price until we get through the foreclosure situation," Leslie Appleton-Young, chief economist for the realtors group, said in an interview. "We still have a process to go through. There's still quite a lot in the pipeline."

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The group's forecast for next year is based on the assumption that the U.S. financial system and overall economy has a weak first half of 2009 and improves in the second half, Appleton-Young said. "The big question mark is the state of the overall economy," she said, adding that if the federal government's financial rescue plan doesn't succeed and the economy slips into recession, ``then we would kind of have to redo the forecast'' for 2009. ``We're in uncharted territory.''

From the LAT:

Additional notices of default and foreclosure are expected in 2009 when a new wave of adjustable mortgages will reset. That will continue to push down the median prices of homes statewide, possibly into 2010, said Raphael Bostic, an associate professor at the USC Lusk Center for Real Estate. "Prices could inch up month over month next year, but a lot of moving parts have to align in the economy for that to happen," Bostic said. "And assuming mortgages are plentiful." That, economists agree, is the big "if" hanging over the real estate market.