“The housing market has made great strides with marked improvements over the past year, and this trend is expected to continue into 2014, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2014 California Housing Market Forecast.”
The positive signs outlined by the forecast point to strong demand for homeownership, and both sales and home prices will experience further gains. 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. In addition, sales will shift toward primary home buyers after a period of time in which buyers faced stiff competition from investors. The state can expect to see sales gain 3.2 percent next year to reach 444,000 units, up from the projected 2013 sales figure of 430,300 homes sold.
C.A.R. Vice President and Chief Economist Leslie Appleton-Young commented the following:
“We’ve seen a marked improvement in housing market conditions in a year with the distressed market shrinking from one in three sales a year ago to less than one in five in recent months, thanks primarily to sharp gains in home prices. 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.”
While overall the forecast is positive, there are still some lingering issues that could have an impact on the health of the market. For instance, federal, fiscal, monetary and housing policies – such as the mortgage interest deduction and mortgage finance reform – could have a detrimental impact. Limitations presented by the housing supply and the actions of the Federal Reserve are also causes for concern.
That being said, mortgage interest rates will remain at historically low levels, even with a projected rise to 5.3 percent for the average 30-year fixed mortgage interest rate.
And it’s not just the housing market that will see improvements in 2014. C.A.R.’s forecast also projects growth in the U.S. Gross Domestic Product of 2.8 percent in 2014, after a projected gain of 1.8 percent in 2013. 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.
C.A.R.’s latest forecast builds on the positive signs that the economy is experiencing as it enters the fourth year of a modest recovery.”
*ARTICLE COURTESY OF JEANNETTE BROWN
This blog is courtesy of The Dawn Thomas Team who is an award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos 650-701-7822. We help nice people with selling and buying homes in the greater Silicon Valley and Beyond!