With fewer investors in the market and more homes for sale, stay tuned for a return of traditional homebuyers, as home sales rise modestly and prices flatten out in 2015. The 2015 Housing Market forecast released by the California Association of REALTORS® (C.A.R.) was also presented to the state's REALTORS® who gathered this week in Anaheim for the California REALTOR® Expo.
C.A.R.'s 2015 Housing Market Forecast sees an increase of 5.8 percent or 402,500 existing home sales next year, 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.
David Tonna, president of the Silicon Valley Association of REALTORS® (SILVAR), welcomed the news. "This is good news for homebuyers, especially first-time homebuyers who have had to compete with multiple offers and higher bids from investors the past couple of years," said Tonna, who was in Anaheim with other members of SILVAR's leadership and C.A.R. Directors.
Leslie Appleton-Young, C.A.R. vice president and chief economist, said the U.S. economy is expected to grow more than it has in the past five years and housing inventory will improve. California home sales and prices will see a modest upward trend in 2015. The U.S. Gross Domestic Product is projected to grow to 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 drop 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, still remaining at historically low levels.
California's 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.
"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. This should help moderate the decline in housing affordability we saw occur over the past two years," said Appleton-Young.
Appleton-Young added, "The state will continue to see a bifurcated market, with the San Francisco Bay Area outperforming other regions, thanks to a more vigorous job market and tighter housing supply."
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 email or call the SILVAR office at (408) 200-0100.