A report from the California Association of Realtors offers new hope for first-time and trade-up homebuyers, forecasting healthy growth in real estate markets across the state in 2014 and predicting that fewer investors and a greater supply of homes for sale will open the field to a wider range of buyers.
The association also expects the median sales price to rise an average 6 percent after a projected 28 percent jump in 2013.
“The housing market has improved over the past year, and we expect this trend to continue into 2014,” said CAR President Don Faught, in a statement accompanying the 2014 forecast.
“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,” continued Faught.
The Housing Market Forecast matches other reports we’ve seen recently at Pacific Union, which predict more-normal real estate activity in the Bay Area in the coming year.
CAR economists also predict continued growth in California’s economy and falling unemployment.
The average interest rate for a 30-year, fixed-rate mortgage is forecast to rise to 5.3 percent but will still remain at historically low levels.
“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,” said Leslie Appleton-Young, CAR chief economist. “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.
“The wildcards 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.”
(Image: Flickr/Scott Maxwell)