After distressed sales lost their hold on much of California's market over the past year, the state's housing market will continue to improve in 2014, with sales shifting toward primary home buyers and both sales and home prices posting further gains, according to the California Association of REALTORS® "2014 California Housing Market Forecast," released this week.
The C.A.R. forecast expects sales to rise 3.2 percent next year to reach 444,000 units, up from the projected 2013 sales figure of 430,300 homes sold. Sales in 2013 will be down 2.1 percent from the 439,400 existing, single-family homes sold in 2012.
"The housing market has improved over the past year, and we expect this trend to continue into 2014," said C.A.R. President Don Faught. "As the economy enters the fourth year of a modest recovery, we expect to see a strong demand for homeownership, as buyers who may have been competing with investors and facing an extreme shortage of available housing return from the sidelines."
C.A.R. Vice President and Chief Economist Leslie Appleton-Young, who delivered the REALTOR® forecast this week at the California REALTOR® Expo 2013 in Long Beach, Calif., projected a growth in the U.S. Gross Domestic Product of 2.8 percent in 2014, after a projected gain of 1.8 percent this year. She described growth this year as being moderate, but consistently positive. She indicated the country needs at least a 3 percent growth rate to be on the road of full recovery.
With nonfarm job growth of 1.9 percent in California, the state's unemployment rate should decrease to 8.3 percent in 2014 from 9 percent in 2013 and 10.5 percent in 2012.
The average for 30-year fixed mortgage interest rates will rise to 5.3 percent, but will still remain at historically low levels.
The California median home price is forecast to increase 6 percent to $432,800 in 2014, following a projected 28 percent increase in 2013 to $408,600.
Appleton-Young said 2014 will see "a continuation of slow recovery and continued strength in the housing sector." She noted that the housing sector has been the "engine of growth" for the economy."
"As the market continues to improve, more previously underwater homeowners will look toward selling, making housing inventory less scarce in 2014. As a result of these factors, we'll see home price increases moderate from the double-digit increases we saw for much of this year to mid-single digits in most of the state," said Appleton-Young.
Wild cards for 2014 include federal, fiscal, monetary and housing policies – such as the mortgage interest deduction and mortgage finance reform – as well as housing supply and the actions of the Federal Reserve, which will ensure a higher rate environment.
The California REALTOR® Expo 2013 was held Oct. 8-10 at the Long Beach Convention Center. Directors from the Silicon Valley Association of REALTORS® attended the C.A.R. business meetings there and were among nearly 8,000 attendees at the trade show.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.