What is 2015 going to bring to our housingmarket?

If you have been following the housing market newsin 2014, you may notice the status of the housingmarket recovery seems indeed uncertain. Whathappened?

Homes sales in 2014 slowed down from the yearbefore. Total sales of existing single-family homesales in 2014 are projected to come in about 8percent lower than 2013. In 2014, California’shousing market moved away from being largelydominated by investor activity and strong competitionto a more balanced market. Dramatic home pricegrowth along with depleted inventory reduced profitmargins for many of the investors. Investorsconsequently exited. Nevertheless, diminishedinvestor activity has not been replaced by activityfrom traditional consumers. As a result, home pricegrowth that soared in 2013 slowed down this year.After more than 20 months of double-digit year-over-year increases in home prices, we are now looking atnormalized single-digit price growth. Homes areeven being sold below listing price in some markets. Also, severely depleted inventory of homes availablefor sale finally improved. While still an issue in areaswith high buyer demand, inventory has improved inall price segments and across most parts of thestate. Furthermore, mortgage interest rates haveremained steady and certainly below forecasts thatwere anticipated for this time of 2014. Takentogether, housing fundamentals are good and buyersand sellers are adjusting their expectations.

What does that mean going forward?  In 2015,housing market is expected to continue movingalong a “normal” continuum. While it is difficult todefine what “normal” means after a decade ofvolatility, improvements in housing fundamentalsalong with improvements in the economy and the jobmarket indicate that a better balance will be achievedbetween traditional buyers and traditional sellers

Improvements in inventory of homes available forsale will help fuel demand for homes among buyers.Also, diminished competition from investors and cashbuyers, and slower price appreciation, will restoresome confidence back among buyers. Sellers on theother hand recognize that the market frenzy seen in2013 no longer exists and home price growth hasstabilized.

C.A.R. predicts that sales of existing single-familyhomes will increase in 2015, 5.8 percent, to about403,000 sales. Median prices are also predicted tocontinue rising, with forecasted change of 5.2 percentto $478,700. And lastly, interest rates on 30-yearmortgages will increase at some point in 2015 andare expected to average about 4.5 percent for 2015.Increase in prices along with higher interest ratesmean that housing affordability for the state willdecline further. The decline of 3 percentage pointswill put housing affordability at 27 percent in 2015,suggesting that 27 percent of households will be ableto qualify for a median priced home. One of the mainconstrains among potential buyers has beendecreased affordability. Nonetheless, pricestabilization, historically low mortgage rates andgreater inventory should prop the market in 2015.

Brought to you by:

Robert LeidigREALTOR®Century 21 Town & Country3700 Inland Empire Blvd. #150Ontario, CA 91764

Office: 909-204-5800Cellular: 909-957-7661Email: rle3491929@aol.comBRE License: 01422758