Realtors Release Market Forecast
With more available homes for sale, California’s housing market will see fewer investors and a return to traditional home buyers as home sales rise modestly and prices flatten out in 2015.
This according to the California Association of Realtors’ (C.A.R.) recently released 2015 California Housing Market Forecast.
The C.A.R. forecast sees an increase in existing home sales of 5.8 percent next year to reach 402,500 units, up from the projected 2014 sales figure of 380,500 homes sold. Sales in 2014 will be down 8.2 percent from the 414,300 existing, single-family homes sold in 2013.
"Stringent underwriting guidelines and double-digit home price increases over the past two years have significantly impacted housing affordability in California, forcing some buyers to delay their home purchase," said C.A.R. President Kevin Brown.
"However, next year, home price gains will slow, allowing would-be buyers who have been saving for a down payment to be in a better financial position to make a home purchase."
"Moreover, prospective buyers should know that it’s a misperception that a 20 percent down payment is always required to buy a home.
Brown pointed out that there are numerous programs available that allow consumers to buy a home with a low down payment. These included FHA loans, which lets buyers put down as little as 3.5 percent.
C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 3 percent in 2015, after a projected gain of 2.2 percent in 2014. With nonfarm job growth of 2.2 percent in California, the state’s unemployment rate should decrease to 5.8 percent in 2015 from 6.2 percent in 2014 and 7.4 percent in 2013.
The average for 30-year fixed mortgage interest rates will rise only slightly to 4.5 percent but will remain at historically low levels.
The California median home price is forecast to increase 5.2 percent to $478,700 in 2015, following a projected 11.8 percent increase in 2014 to $455,000. This is the slowest rate of price appreciation in four years.
"With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.
"While the Fed will likely end its quantitative easing program by the end of this year, it has had minimal impact on interest rates, which should only inch up slightly and remain low throughout 2015."
Appleton-Young remarked that steady rates should help moderate the decline in housing affordability over the past two years.
The state of California will continue to see a bifurcated market, with the Bay Area outperforming other regions, thanks to a more vigorous job market and tighter housing supply.
Leading the way in California real estate for more than 100 years, the California Association of Realtors (www.car.org) is one of the largest state trade organizations in the United States, with more than 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.