What’s ahead for California’s real estate housing market? Expect moderate home price increases due to lack of inventory, higher mortgage rates that may taper this fall and an increase in the number of trade-up buyers.
That’s the word from Leslie Appleton-Young, vice president and chief economist for the California Association of Realtors (CAR), who recently spoke in El Cajon to members of the Pacific Southwest Association of Realtors (PSAR), a San Diego-area trade group for realtors.
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Appleton-Young’s take on the state of California’s housing market also included the following: the share of equity home sales – or non-distressed property sales – will continue to expand (equity sales in June comprised four of every five sales, thanks primarily to a drop in distressed sales); depressed buyers are getting more selective while homebuyers already in the market will remain aggressive in their pursuit leading to bidding wars and multiple offers on the most attractive residences; credit restrictions are easing, which represents more opportunities for loan modifications and refinances; and, price appreciation is cooling investor demand, possibly causing more flipping.
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“I believe we’re watching the continuation of a slow recovery,” Appleton-Young said. “When equity home sales make up four of five sales, reaching the highest level in nearly six years, this indicates a healing of the market.”
Appleton-Young also said the majority of investors are opting to rent and hold while some sellers are still waiting on the sidelines for values to gain, which also is contributing to limited inventory conditions.
“The supply of inventory is low in most parts of the state, even while housing affordability is at historic highs,” she said. “Rates will remain good, but not as good as they were.
“Higher home prices in the past year have given homeowners with previous underwater properties an opportunity to become trade-up buyers. However, many are finding this difficult because they either lack sufficient cash for a down payment or they are concerned that if they sell, they will have no place to go.”
She predicted the real estate market will remain “essentially flat” in 2014, but added that more details will be available at her presentation in October at CAR’s California Realtor Expo, a trade show for California’s real estate industry to be held in Long Beach.
Appleton-Young concluded her remarks to attendees at the PSAR East County Service Center in El Cajon by saying “define your brand and protect it, and embrace life-long learning. The most valuable service you can give a client is your undivided attention. Life is short. Love what you do or do something else.”
PSAR offers ongoing education training, advocacy and other services and resources for its members who primarily serve the San Diego region’s East County and South County communities.
