For most, it is no surprise to read the housing market here in Sacramento and around the state has improved over the past year but what about 2014, what will happen next year? The California Association of Realtors (CAR) is forecasting the positive trend will continue into 2014.
In their forecast, CAR is predicting primary home buyers will make up more of the sales than investors. During the past year primary buyers have struggled with the competition from investors for what has been a limited supply of homes on the market.
“We’ve come up against an exceptionally low-inventory situation in California for at least the last year and half, and it has started to take a bite out of sales” says Leslie Appleton-Young, the association’s chief economist. She says the market is still “robust” but predicts a 2.1 percent drop in the number of homes sold this year over last year due to limited supply. But two trends are changing that, says Appleton-Young.
One of those trends is the rise in home values which is reducing the number of homeowners who owe more on their mortgage than their homes are worth. This will provide those homeowners who have felt trapped over the past several years to sell. This alone should increase the number of listings and sales as we move into 2014.
The forecast from CAR also indicates investors are not going away but many who have been buying and renting will start to sell or ‘flip’ homes.
The forecast projects home sales to reach 430,300 units in California this year and rise 3.2 percent next year to reach 444,000 units. The median price of a California home will also increase, according to the forecast: 28 percent this year over last year to $408,600, and then another 6 percent in 2014 to $432,800.
