News

Today's hot housing market to get even better in 2014

Economist projects sales, prices to continue upward trend

Buyers and sellers alike know that the California housing market has heated up, and now the California Association of Realtors projects that the trend will continue upward into 2014.

In its latest forecast, CAR predicts primary home buyers will make a comeback after a period of tough competition with 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" said Leslie Appleton-Young, CAR's chief economist. She said the market is still "robust" but that there's been 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.

One is a rapid rise in home values. Appleton-Young said that's lifting many underwater homeowners who still owe more in mortgage payments than their homes are worth. Higher prices are providing them with the opportunity to sell. Appleton-Young says that's beginning to boost the number of real estate listings.

The second, according to Appleton-Young, is a shift in investor behavior. For the past three or four years, investors have bought homes and rented them out. Now, they're starting to "flip" the houses, in other words buying, fixing and putting them back on the market more frequently.

Appleton-Young's 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.

Appleton-Young also said the dynamics of today's housing market are different from earlier years when those without adequate income were buying homes they couldn't afford.

It's a lot harder to get a home loan today, she explained.

"The underwriting that goes into loan origination today does not look anything like the underwriting that we had in 2003-2006, where if you essentially had a pulse, you could get a loan," Appleton-Young said.

Comments

Posted by fhagen, a resident of Sycamore Valley Elementary School
on Oct 18, 2013 at 10:55 am

This is a California Association of Realtors' puff piece. This should not be reported as news. Is CAR really an objective observer with no interest in whether the housing market is heating up . . ? Investors are exiting the housing market because prices have risen too fast due to lack of supply and zero interest rates. How long will interest rates be at rock bottom? What will happen to prices when they rise back to normal levels?


Posted by C. R. Mudgeon, a resident of Danville
on Oct 18, 2013 at 2:56 pm

When is the best time to buy a house, according to the CA Association of Realtors? Now!

When is the best time to sell a house, according to the CA Association of Realtors? Now!

The answer is always "Now!", in puff pieces (as fhagen correctly described them) from Realtor's trade groups.

Coincidently, on KTVU (Ch. 2) news last night, there was a story about the real estate market having cooled off considerably from a month or two ago, so that it was becoming better for buyers, in that there were far fewer offers being made, and therefore less competition. (Obviously this also means that it has been getting relatively worse for sellers, compared to a month or two ago.) All of this will probably change several times before the end of the year.


Posted by Huh?, a resident of Danville
on Oct 19, 2013 at 1:36 pm

I have to agree. Nothing but a puff piece, pulled out of..... "thin air"... by people with a clear financial agenda. Wishful thinking at best. No one knows what the real estate market is going to be like next year; it's like the difference between weather and climate. You can make macro predictions over a lengthy time period with a fair degree of accuracy (real estate values will track family incomes over the decades is a pretty good bet) but you can't realistically predict what it's going to be like next year.


Posted by Joe Combs, a resident of Alamo
on Oct 25, 2013 at 11:12 am

The best time to buy or sell a home is when prices are rising. Everyone wins.


Posted by Huh?, a resident of Danville
on Oct 25, 2013 at 4:56 pm

Prices were rising in 2007. It was a great time to sell. Buying? Not so much. Everybody didn't actually win.


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