CAR predicts a strong housing market for 2014
The California Association of Realtors (C.A.R.) has released its forecast for 2014 and sees a continued improvement in the state’s housing market. The organization predicts fewer distressed as sales shifting toward primary home buyers with both sales and home prices posting further gains. The C.A.R. “2014 California Housing Market Forecast” shows sales gaining 3.2% percent next year to reach 444,000 units, up from the projected 2013 sales figure of 430,300 homes sold. Sales in 2013 will be down 2.1% from the 439,400 existing, single-family homes sold in 2012.
“The housing market has improved over the past year, and we expect this trend to continue into 2014,” said C.A.R. President Don Faught. “As the economy enters the fourth year of a modest recovery, we expect to see a strong demand for homeownership, as buyers who may have been competing with investors and facing an extreme shortage of available housing return from the sidelines.”
The C.A.R. forecast also projects growth in economy and job markets. It is predicted that the U.S. Gross Domestic Product will grow 2.8% in 2014, after a projected gain of 1.8% in 2013. With nonfarm job growth of 1.9% in California, the state’s unemployment rate should decrease to 8.3% in 2014 from 9% in 2013 and 10.5% in 2012. The prediction is that the average rate for 30-year fixed mortgage interest rates will rise to 5.3%. The California median home price is forecast to increase 6 percent to $432,800 in 2014, following a projected 28 percent increase in 2013 to $408,600.
C.A.R. Vice President and Chief Economist Leslie Appleton-Young spoke on the changing market: “As the market continues to improve, more previously underwater homeowners will look toward selling, making housing inventory less scarce in 2014. As a result of these factors, we’ll see home price increases moderate from the double-digit increases we saw for much of this year to mid-single digits in most of the state. The wildcards for 2014 include federal, fiscal, monetary and housing policies – such as the mortgage interest deduction and mortgage finance reform – as well as housing supply and the actions of the Federal Reserve, which will ensure a higher rate environment.”
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