There are many real estate analysts who are now saying prices have finally hit bottom and I just read a report from Fiserv who is projecting home prices will rise approximately 4 percent per year over the next five years.
If on a national basis the projection is for an average annual price increase of 4 percent what does that mean for the greater Sacramento real estate market? According to the report, markets expected to see the greatest increase in home prices will likely be those hardest hit in the last few years by foreclosures and where prices have fallen the most. This would indicate places like Phoenix and Las Vegas may start to see prices increase faster than the projected 4 percent per year. Sacramento would clearly be in this category and based on what we have seen so far this spring selling season it could finally mean a turnaround in the local housing market.
What is prompting pundits like Fiserv to project five years of increasing house prices? The current level of affordability is positive, falling inventory of ‘for sale’ homes and low interest rates are the factors driving price increases.
The report went on to say investors are expected to help drive most of this price increase, then followed by first-time and trade-up buyers as they re-emerge in bigger numbers.
I am not ready to concur with Fiserv but have to agree we are seeing a wave of investors who are interested in picking up homes in the under $300,000 price range making it difficult for families looking to buy a new home.
