The market in general is coming into equilibrium nationwide after a year or two of spiking prices and historically low interest rates for mortgages. The Federal Reserve Bank is stopping its Quantitative Easing program, the stimulus package where the Fed bought U.S. Treasury bonds in bulk every month. Mortgage rates should slowly begin to adjust up.
While historically low, interest rates will slowly begin to rise in 2015, I predict. We should see rates in the mid 4’s to 5% mid-year and 6% by year’s end.
Overall, prices should remain stable in most areas with a gradual increase in prices up to 5% in general this year. The 30% increases we had been seeing the past couple of years are no longer going to be the rule. They are going to be the exception.
It’s going to get more competitive as first time homebuyers start to flood the market because of the higher interest rates.
It’s going to remain strong as the demand will increase due to buyer demand, although prices will not spike in areas other than the most desirable.
Where to Look for a Deal
San Francisco’s Bayview neighborhood will see resurgence because the prices are relatively low compared to the rest of the city and it’s going to be the last C-Tip 1 area in the City. This means lots of families will set their sights on the Bayview.
In the East Bay, the entire cities of San Leandro, Richmond, Castro Valley, Emeryville, and El Cerrito are going to be hot because they’re still relatively affordable. Oakland’s Bella Vista, Fruitvale, and San Antonio neighborhoods are going to be big.
I recommend anywhere near a BART station in the Bay Area as a hot spot that will increase in value in the coming year.
The number of houses that are going to be available is going to rise. As prices have climbed and now are stabilizing, sellers who were uncomfortable selling because they would not be able to find a new place to live or who were in distress are going to become more confident that they will be able to compete as buyers.
America Foy is a top producing real estate agent at Bay Sotheby’s International Realty. Follow him on Twitter @americafoy, Instagram @americafoyrealtor and Facebook at America Foy.