Home prices will rise next year

California housing prices will slowly pull out of the doldrums next year, although unemployment and the credit crunch will continue to drag on the nation's largest housing market, a forecast released Wednesday said.

The annual market forecast from the California Association of Realtors predicts a 3.3 percent uptick in the median price of a previously owned home, from $271,000 this year to $280,000 in 2010. That would mark the first increase since prices began tumbling in 2007. However, sales next year will drop from 540,000 this year to 527,500 homes in 2010, a 2.3 percent drop.Association economist Leslie Appleton-Young said the sales activity will likely be strong enough to support a price increase, although there are several variables that could derail expectations.

The wild cards for 2010 include foreclosures, loan resets, the labor market and the California budget crisis, as well as the actions of the federal government, she said.Economist Christopher Thornberg, a principal at Beacon Economics, said it's premature to forecast an end to the real-estate crisis because of the number of outside factors.

It's like saying the Dodgers are definitely going to win the game tonight. The wild card is how well St. Louis plays, Thornberg said.