American’s Still Consider Real Estate to be the Best Long Term Investment!

9/9/2014

American’s Still Consider Real Estate to be the Best Long Term Investment!

The California Association of Realtors chief economic advisors has released the following predictions for the California real estate economy moving forward in their mid-year 2014 update:

“Economic assumptions for sales forecast:

Economic growth rate at 2.0% in 2014, less robust than previously expected but improves to 3% in 2015 

CA unemployment rate averages below 8% in 2014, and should drop below 7% in 2015 

With the economy growing slowly but steadily, the 30 year fixed rate mortgage could remain below 5% by the end of 2014 and will be around 5.5% by the end of 2015

Home Sales

The California housing market had a very slow start in sales activities in 2014, as many investors left the market because of the lack of bargain properties.  The double-digit increase in home prices and the surge in mortgage rates since the mid of 2013, meanwhile, curbed sales growth in the market as affordability for primary home buyers fell significantly.  Sales, however, should improve for the rest of the year as many primary home buyers realize that interest rates are likely to increase later this year, and home prices are not going to decline in the short term.  As such, I am expecting sales to be down by less than 1% for the second half of the year when compared to last year.  2015 will be a more normal year and the economy will presumably grow at a faster pace, which will help the housing market. Inventory should gradually improve to 4.0 months – 4.5 months.”