There have been many articles on 2015 Real Estate Market Forecasts popping into my in box these last few weeks. Following is a summary of those for you from the national level to the local level:
National Level
Trulia.com 2015 Forecast - The Hottest Trends - Home prices are no longer significantly under- valued and investor demand is falling back. Ideally strong economic and demographic fundamentals like job growth and household formation would take up the slack but these are relatively weak and that will slow recovery in 2015.
* Consumer optimism is up.
* Affordability will worsen -Home price gains slowed in 2014 and will again in 2015. With consumer optimism more homes could come on the market- cooling prices further but home affordability may still worsen if we see a rise in mortgage rates.
* Even though recovery remains unfinished, the housing market is becoming more stable and more certain for buyers and sellers.
RIS Media: 3 Reasons Housing is Looking Up in 2015
1. Job market is stronger leading to improved consumer optimism. (Consumer confidence is up 19.5% over a year ago.)
2. Home prices are stabilizing. Home prices between January and October 2014 are up nationally 4.5% where they rose 11% during the same months in 2013. Along with our low interest rates, this helps with home affordability.
3. Rents are at a 7 year high making it cheaper to own than rent in most areas of the country.
Realtor.com 2015 Housing Forecast - Stage Set for the Return of the First Time Home Buyer
2015 will see the return of first time home buyers as "increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery" especially in areas with more affordability.
State Level
California Association of Realtors 2015 Market Forcast - Existing single family home sales are forecasted to increase 5.8 percent in 2015 and the annual median price is expected to increase by 5.6 percent. As you can see by the chart below they are also forecasting less affordability and an increase in mortgage rates.
Local Level
Sanjay Varshney - Sacramento Business Review -On the local level I was fortunate to attend a presentation from the Sacramento Business Review Director, Sanjay Varshney in early December. Here are some of the points I noted:
- Sacramento still has a ways to go in the recovery.
- On the positive side unemployment trending is down, vacancy is down, median home prices are up and foreclosure rates are slowing, consumer optimism is up, small business loans are up which is a good sign as they are the lifeblood for this area.
- On the down side the jobs being created are not high paying jobs that allow people to buy homes at a higher price. Sacramento's major challenge is that it is part of the highest welfare state of the US. Though our population is growing, we are becoming poorer. The real estate market has cooled as affordability has gone down. New homes builders are not moving their inventory as expected so construction jobs are down.
- Expectations for 2015 is that mortgage interest rates will go up further reducing affordability.
- Good things in the works for Sacramento include the New Kings Arena, The Connector Project could provide a huge boost, a new CSU College campus is being built in Roseville for up to 25K students. The first classrooms are on target to open in two years with the school being at total build out in five years.
Pat Shea -Lyon Real Estate President - 2015 Housing Forecast - "Time is good to buy a house in the Sacramento area as housing inventory, interest rates and underlying economic fundamentals favor buyers." This will be less likely in the second half of the year.
-Upward pressure in interest rates are inevitable.
- Home affordability in Sacramento is 50% (better than most coastal California cities) with price increases more buyers will be priced out of the market as affordability declines.
- Home prices in the Sacramento area appreciated 7% in 2014 and are expected to increase by that same amount in 2015.
The 2015 Real Estate Market in Summary - At all levels the economists seem to agree that consumer optimism is up, home prices are up, affordability is down, and interest rates will rise in 2015. For these very reasons, it is a good time to buy! It is also a good time to sell because when interest rates do rise there will be fewer buyers in the price level of your home than there are currently. If you or a family member will be buying or selling a home there's no time like the present!
I work primarily in El Dorado Hills and the surrounding areas but am still happy to help however I can!
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