As we approach the end of 2013, it’s a good time to look back at the Bay Area housing market and take a peek at what might be in store for the coming year.
In comparison with recent years, 2013 was a strong year for the real estate market, both here at home and across the country. Sales posted solid gains in most areas, foreclosures and distressed sales declined, and the median sale price continued to rebound sharply from their recessionary lows.
Almost half of the 276 metro areas nationwide saw double-digit increases in home prices last year, led by Las Vegas with a gain of 32%, according to Clear Capital, a national real estate data and analytic firm.
The San Francisco Bay Area median sale price hit $600,000 this year, a 28.3% increase from a year ago, according to Clear Capital.
The housing market benefited from a slow but steady improvement in the economy and the job market, as well as mortgage interest rates that ticked up slightly in 2013 but still remained attractive.
The challenge for many communities wasn’t finding buyers for homes – it was finding enough homes to meet strong buyer demand. That led to multiple offers on homes in many instances and resulted in sale prices exceeding asking prices for a number of properties.
The National Association of REALTORS® said existing home sales should reach nearly 5.13 million units when this year is over, up 10% from last year. And the median sale price, according to NAR®, is expected to be up 11% from a year ago.
So what can we expect for 2014? While no one has a crystal ball, industry experts believe home sales will remain near or slightly above 2013’s level. Additionally, economists are looking for prices to continue climbing due to a stronger economy, lower unemployment, and a shortage of homes available
NAR®’s Chief Economist Lawrence Yun forecasts existing home sales to hold fairly even at about 5.12 million in 2014 and the median sale price to increase nearly 6% with inventory shortages being felt again next year.
Meanwhile, the Kiplinger Letter, in its annual economic forecast issue, calls for a 4% increase in existing home sales to 5.2 million units. The publication says new home sales are likely to jump about 16% next year after soaring 36% in 2013 and 20% in 2012.
Both Kiplinger and NAR® believe a shortage of inventory will continue to be a factor next year.
“Housing starts are the only way to alleviate inventory shortages,” Yun said. New home construction is expected to reach 1.13 million units next year, he forecasts, well short of the underlying demand of about 1.5 million.
While 2013 saw a strong seller’s market in many areas, the pendulum started swinging back to a better balance between buyers and sellers in recent months. That’s encouraging news for those buyers who have either sat on the sidelines or lost out in multiple offer situations.
Although housing experts like NAR’s® Yun expect continued strong sales and rise in home values, they see a less frenzied, less competitive market in the new year for buyers with fewer multiple offer situations and less bidding up of sale prices.
So if you’ve been thinking about buying a home, now may be the time to get into the market and take advantage of these more favorable market conditions. And if you’ve been thinking about selling, there will likely continue to be healthy demand for your home from buyers in the coming year.
Only time will tell how 2014 will turn out for our local real estate market, but for now the housing market forecasts should give both potential homebuyers and sellers reason to celebrate the new year in style!
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