It’s no secret that 2014 was a hard year for the national housing market. Even in sunny Southern California markets were continually plagued by an out-priced buyer base and too few homes to choose from. After weathering the storm of crises in the past and finishing out this year’s busy home buying season at a high point, it seems this year’s real estate struggles will not be in vain. The California Association of REALTORS® recently released its real estate outlook for 2015 indicating high hopes for the market after making important small steps toward recovery this year.
CAR forecasts a rising amount of homes on the market as well as a flattening of home prices as two main factors that will bring more buyers and sellers to the market throughout the next year. With these factors bolstering the market, CAR expects to see a major uptick in home sales, especially as this year turned out to be such a lack luster year following 2013, which posted some big numbers.
In 2013 there were about 414,300 existing homes sold in California. Sales in 2014 are projected to be 8.2 percent lower with a value of 380,500, but in 2015 CAR predicts an uptick of about 5.8 percent to 402,500 units.
“Stringent underwriting guidelines and double-digit home price increases over the past two years have significantly impacted housing affordability in California, forcing some buyers to delay their home purchase,” said C.A.R. President Kevin Brown. “However, next year, home price gains will slow, allowing would-be buyers who have been saving for a down payment to be in a better financial position to make a home purchase.”
Economy Gains Will Give Southern California Home Buyers Strength
Especially in Southern California where crashing home prices gave investors a tremendous amount of power in snatching up homes in foreclosure, CAR is looking forward to stronger economic conditions that will ease investor activity while giving traditional home buyers better footing for buying homes. CAR’s forecast predicts a growth in the U.S. economy that will see the Gross Domestic Product increase by 3 percent in 2015 after a projected gain of 2.2 percent in 2014.
CAR expects that growth to trickle into California in the form of a 2.2 percent growth of non-farm jobs with a continuation in the decrease of the unemployment rate. Unemployment has been on a downward trend for the last two years coming down from 7.4 percent in 2013, to 6.2 percent in 2014 and a predicted 5.8 percent in 2015.
“With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “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.”
If you are interested in learning more about the luxury real estate market in Los Angeles, please don’t hesitate to contact our team of property experts today.