C.A.R. released their 2015 forecast:
The California median home price is forecast to increase 5.2 percent to $478,700 in 2015, following a projected 11.8 percent increase in 2014 to $455,000. This is the slowest rate of price appreciation in four years.
“With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “While the Fed will likely end its quantitative easing program by the end of this year, it has had minimal impact on interest rates, which should only inch up slightly and remain low throughout 2015. This should help moderate the decline in housing affordability we saw occur over the past two years.”
“Additionally, the state will continue to see a bifurcated market, with the San Francisco Bay Area outperforming other regions, thanks to a more vigorous job market and tighter housing supply.”
They are projecting an 8.2% decline in sales this year – and they think sales AND prices will rise next year in spite of their expectations of higher rates and less affordability?
Their own graph shows pendings on a YoY downward trend for two years:
An improving economy next year – if it improves – probably won’t change the momentum of flatline pricing we have experienced over the last few months. The only thing that could directly and positively impact sales and pricing will be mortgage rates in the 3s – hope they stick!