Despite expectations of an improved U.S. economy and more robust real estate transactions in the year ahead, the median home price gain in California is predicted to slow to 5.2 percent for 2015 as compared to a projected 11.8 percent increase for the 2014 calendar year.
According to the California Association of Realtors, the median home price is forecast to increase to $478,700 by the end of 2015 from $455,000 in 2014.
More homes are expected to be available on the market for purchase by potential owner/user consumers in 2015 as investors have been driven away by the large price appreciation of the last few years. The California Association of Realtors sees a return to a more normal traditional home buyer market with home sales rising modestly and prices flattening out in 2015.
As concerns interest rates, the average 30 year fixed rate mortgage will rise only a minimal amount to about 4.5 percent and is expected to remain there for the entire 2015 calendar year. The continuance of these historically low interest rates should help to encourage prospective buyers to enter the home ownership market or trade up.
The expectation is that slowing growth in our residential home market will allow buyers who have been saving for a down payment to be in a better position in the next few years to pull the trigger on a purchase.
Also, fueling the market will be the baby boomers.
“The consistent rise in home equity has contributed to the strong gains in the 55 year old plus housing market,” according to Chief economist David Crowe for the National Association of Homebuilders (NHAB).
Crowe explained that many consumers who had been sidelined due to the inability to sell their current homes at an acceptable price are now in a position where they can do so.
Homebuilder confidence in the over 55 age group is now at its all time high since the NAHB began tracking this category 6 years ago.
The CEO of Pulte Homes, Richard Dugas revealed recently that, “We have really seen a resurgence in the active adult market. It typically comes back a little slower than the rest of the market, but for the first three quarters of this year, our sales comps for active adult are up 22 percent.”
Some real estate pros are predicting that 2015 will be a great year for real estate since it will be all about jobs, oil prices and interest rates.
Increased employment, lower gas prices and historically low interest rates mean more confidence and more money in people’s pockets to buy real estate.
Other analysts’ optimistic position on our real estate market focuses on the significant drop in those homeowners previously “under water” on their mortgages. They comment that 2015 will be the first year to see the recovery of the nation with even those who had lost their homes to foreclosure getting back into the real estate game.
The baby boomers will undisputedly have a huge influence on the real estate market because of their sheer numbers. By 2030 there is expected to be more than 72 million Americans over the age of 65 which is almost twice the number of this age group as of 2007. Pulte Homes is presently the largest player in the active adult housing group.
For a free courtesy consultation, contact Bess Hochman, a top Westside Real Estate Broker for more than 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article. Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com.
