Forecasting the real estate market has never been easy, and most people are not too successful at it. There are so many factors that influence real estate, including external pressures created by political events, natural or manmade disasters, and unforeseen economic triggers, among other things. Some predictions do not even include these factors, and are little more than educated guesses.
Even so, there are some pretty smart people out there who seem to have a handle on what might happen. I trust the forecasts that are made by the research staff at the California Association of REALTORs (CAR). They seem to be the most in tune with housing statistics within the state. With still incomplete data from December, they compare a projected 4.4% decrease statewide in the numbers of single-family home (SFH) sales for 2014 over 2013, along with a 10% increase in median sales price. Further, they predict an increase in 2015 in both numbers of sales (5.6%), with a smaller (3.5%) price increase.
Examining this at a high level would suggest that, for homebuyers, 2015 foresees more opportunity with a slightly slower price increase. Interest rates are remaining low for now, but a CAR forecast of up to 1% increases in fixed rate mortgages in 2015 could hinder things for many buyers. Using current average numbers for the Bay Area, that much of an increase in mortgage rates could raise a monthly payment by as much as $250 or more on purchases made by the end of 2015.
It’s easier to look at history and trends than it is to forecast the future, and although we still don’t have any official year-end data for 2014, there’s enough out there to suggest a few things about the past year’s Bay Area market as a whole. Our SFH median price rose by over 8%. Two Bay Area counties, Marin and San Mateo, ended November with a median price of over a million dollars ($1.11M and $1.09M respectively), whereas in November of 2013, no Bay county could claim that seven-figure tag. San Francisco was in third place, at $956,320. Every Bay county, with the exception of Central Contra Costa, saw an increase in median price at the end of November, with San Mateo, Solano, and Napa leading the pack in the rate of increase.
As I said at the outset, predicting what’s going to happen in real estate is a bit of crapshoot. But one thing that we know for sure is what’s happening now. Find yourself a realtor who knows your local market, and you will have the guide you need through the jungle.
With this article, I’ll be wrapping up my series of monthly real estate contributions to the San Francisco Bay Times. It’s been a pleasure to write for this fine publication, and I’ve been honored to work with the great people who publish the paper. I hope that these articles have helped at least a few of you, and although I won’t be writing for a while, I’ll still be eager to help any of you who need some advice, either with finding a good agent near you, or with the purchase or sale of a home in 2015 or beyond. Happy New Year!
A Bay Area native, Mark Penn has been a REALTOR® with Coldwell Banker since 2004. He is also active in animal welfare, and is a former educator, facilitator, and air traffic controller. Mark can be reached at mark@MyHomeInSonoma.com