It’s that time of year when we try to dust off the old crystal ball and see if there are any indications as to what the upcoming year might have in store for us. While we can never seem to totally rely on that crystal ball’s findings (should have sold our Lake Tahoe house in 2006 despite that ball telling us to hang on), it is always a good idea to at least pay some sort of attention.
Buyers will be most pleased with the just released 2015 California real estate forecast. While the home sales throughout the state are expected to increase slightly, experts are predicting that home pricing gains will be the slowest in four years. According to the California Association of REALTORS®, “the California housing market is expected to return to a traditional buyers’ market with less investors due to more available homes for sale with prices flattening out and sales rising at a modest pace.” As the last couple years have put some buyers home purchasing plans on hold due to the home price increase and strict guidelines for underwriting, this year puts home buyers in a better financial position to make a real estate purchase.
Another plus for buyers looking to purchase more affordable homes is that we are seeing an increase in the variety of programs giving home buyers the ability to buy a home with less than the standard 20% down payment. For example, there are FHA loans that allow buyers to make a down payment as small as 3.5% of the purchase price. It still makes us nervous when we see offers with these low down payments come across our desks yet they sure seem to be working. Mortgage interest rates have been the lowest in years and will most likely rise to around 4.5% which is still historically low. The positive news continues as unemployment is expected to decrease to 5.8% from the previous year which was 6.2%. With all of these factors combined, C.A.R. predicts existing home sales will have an increase of 5.8 % next year as well as reach 402,500 homes sold. The median home price forecast throughout California is expected to increase to $478,700, up 5.2% from 2014. The median home price for homes in the South Lake Tahoe area is currently $336,000. If the same rate of 5.2% increase holds true for the South Shore, we should see a median home price of approximately $354,000 next year at this time.
The Bay area specifically is expected to outperform compared to other regions due to tighter housing supply and strong job market. This is important to note as the majority of Lake Tahoe home buyers come from this area. On a national level, the 2015 real estate forecast varies depending on which economist you listen to. However, there is a general consensus that, like California, home sales will increase.
