The national real estate market has weathered an interesting year. Tight inventory, massive price gains and stagnant sales have plagued nearly every market throughout the country, so much so that the National Association of REALTORS® is predicting this year’s home sales totals to fall short of 2013’s total.
Looking ahead, however, NAR and other market analysts are predicting that 2015 will be a more balanced and neutral market where luxury buyers will continue to come out on top of the pile. Among the predictions that are circling the housing market is one that prices will continue to rise, but will do so at a slower pace.
Equity came back to homes in a big way in 2014, and market experts see no reason as to why that trend may subside. However, data from S&P/Case-Shiller shows that homes are not appreciating as rapidly as before as lack of inventory and investor activity are becoming less of a presence on the market. From December 2013 to September 2014, the year-over-year home price gain went from 10.8 percent to just 4.8 percent, indicating that this steadier price growth may be the new normal for the national housing market.
Affordability still stands tall as one of the main factors working against home buyers. Although home prices are gaining more slowly, wage growth isn’t happening on an equal level, which could work to keep many buyers out of the home market.
Mortgage rates are expected to climb in 2015 as well. The Mortgage Bankers’ Association predicts rates will rise to 5 percent by the end of 2014, while Freddie Mac predicts a slightly softened value of 4.5 percent.
Los Angeles Market Expected to be Hot in 2015
According to Realtor.com’s chief economist, Jonathan Smoke, Los Angeles is expected to be one of the hottest housing markets in 2015. Unlike San Francisco where home prices have ballooned out of control, Los Angeles has sustained healthy growth in home prices and its growing population of luxury home buyers is going to help it have a very good year in 2015.
Smoke predicts that home sales will increase in Los Angeles by 6 percent in the next year, however much of that will likely be fueled by the luxury market as it has continually proven to be the strongest portion of the overall market.
“The market’s biggest challenge is affordability,” said Smoke to Forbes.
The Los Angeles market is also likely to thrive due to its popularity among foreign home buyers who are interested in U.S. real estate. With economic weakness occurring in China, Europe and Russia, more value is being placed in the dollar, and many more of the world’s richest home buyers will be coming to Los Angeles and Southern California to invest in real estate.
If you are interested in learning more about the exquisite homes of Los Angeles, please feel free to contact our team of property experts today.