What Can Home Sellers and Buyers Expect in the 2015 Home Market?
The First Two Months Are Revealing
In the San Diego Housing Market, much of my prognosis for the rest of the 2015 Housing Market is made up with the benefit of many others opinions already forecast. The end of Feb ends the first two months with resales being lower than expected and new homes sales picking up steam.
This has been accomplished with the easing of credit qualifications for new home buyers. News of the Fannie and Freddie review of qualifiers has already already lead to the easing of those credit qualifiers with slightly lower credit scores and less down payment helping new home buyers. But the resale market’s buyers are still tending to hold back. One reason may be that while unemployment is easing, salaries are stagnet.
We also know that there are over 450,000 residential home buyers in California that are still under water. The Federal and state tax forgiveness provisions in the tax code have been extended by Congress prior to Christmas this year. So I expect with prices starting to flatten out, there will be an uptick in the number of distressed sales for 2015.
Speaking of prices, I think we have hit a plateau that will vacillate a little but overall not much increase in prices for the rest of the year ( maybe 3 or 4 % of gained equity) in 2015. So what can Home Sellers and Buyers Expect for the rest of the 2015 Home Market?
I predict that more and more home sellers will use professional stagers to improve the salability and desirability of the homes. Even with less competition, buyers just don’t seem interested in the properties that need cosmetic help or rehabing. Many more prefer properties with upgrades suiting today’s taste for move in ready with upgraded Kitchens and Baths. Home improvement contractors are going to have a very busy year.
I predict that Sales will be slow through the rest of the first quarter and will pick up over the 2nd and 3rd quarters. However, as the Fed eases the efforts to keep interest rates low, I think it would be fair to predict that at least initially it will slow homes sales some. But then, as always, the Demand for housing should keep pace with 2014.
New Construction starts will also increase in 2015 as the overall economy allows. The biggest issue San Diego has is that land and construction costs are still increasing and any thinking that things will get more affordable is out the window. The building fees in San Diego are some of the highest in the US so home builders have little room for negotiated pricing. It just gets more expensive to build. And those prices are being passed on to, you guessed it, the new home buyers.
The demand for rental housing continues to increase. There is no softening of demand expected and rentals remain outrageously high. The days of under a $1000 for 2BA and 2BA don’t look they will re-appear anytime soon. Certainly not likely in 2015.
The overall housing forecast for 2015 is a mixed bag but there will be plenty of activity for home sellers. But prices will remain sensitive and market demand will fluctuate throughout the year.