From Bob Foster, President of Coldwell Banker’s Residential Brokerage in Los Angeles:
It’s about that time when people start looking ahead to next year and making their real estate predictions. Will low housing inventory continue in many Southern California neighborhoods? Will prices and interest rates continue their rise? The California Association of REALTORS®’ (C.A.R.) 2014 California Housing Market Forecast may shed light on some of these pressing questions.
Overall, the C.A.R. outlook for our state is positive. Sales are expected to shift toward primary homebuyers, while both sales and home prices should make further gains. C.A.R. predicted an increase of 3.2% in sales next year; the median home price will jump 6% to $432,800. The report also forecasted that the average for 30-year fixed mortgage interest rates will rise to 5.3% “but will still remain at historically low levels.”
Noted C.A.R. President Don Faught: “The housing market has improved over the past year, and we expect this trend to continue into 2014. 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.”
Other economic fundamentals show a mixed picture. On the positive side, growth in the U.S. Gross Domestic Product is expected to hit 2.8% in 2014 and the state’s unemployment rate should also decrease to 8.3% (down from 9% in 2013 and 10. 5% in 2012). However, there are a few “wildcards,” which 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 report said.
Some of what C.A.R. has forecasted appears to already be in full swing in Los Angeles, Ventura and Santa Barbara Counties. Looking at median sold home prices year-to-year (according to C.A.R.), Los Angeles County has already seen a 23.1% increase; Ventura County has seen a 27.1% increase; and Santa Barbara County has seen a whopping 66.8% increase. Sales in Santa Barbara are also up by double digits year-to-year, while Los Angeles County has seen a modest increase. While it’s always difficult to predict where the real estate market will be headed, I hope this information will at least help bring you one step closer to making an educated decision about buying or selling a home. Here’s to a bright 2013… and an even brighter 2014!
• C.A.R.’s 2014 California Housing Market Forecast says housing market will continue to improve in 2014
• Median home prices will rise 6% and home sales will rise 3.3% in 2014
• Mortgage rates will also increase, but will still remain at historically low levels