What Do Changing Conditions Mean for Our Market Moving Forward?

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Hello, and welcome back to our video blog! We hope everyone had a safe and happy holiday season!

With 2014 on the books, there's no better time to take a look back and recap what we saw in real estate over the last 12 months. Last year started off with a bang, as we saw large price increases at the beginning of the year. With prices recovering, we saw the exit of a lot of cash-offer investors from the market. Around June of 2014, we started to see the market level off, as there were more traditional buyers and sellers active in the market.

As far as inventory goes, there were only about 2,400 homes in San Fernando Valley on the market in the first half of the year. By August of 2014, that number spiked to 3,400 homes on the market. This can be attributed to more homeowners wanting to take advantage of rising home values.

As we made our way into the holiday season, we saw interest rates drop from 4.5% to below 4%, which triggered another surge of demand for homes. By the end of the year we saw inventory fall back down to 3,100 homes on the market. Over the course of 2014, we saw an 8% change in inventory.

What does all of this mean moving forward? We think the market will be much more normal in 2015. As a result of improvements in the economy, we're expecting a much more balanced market. There will likely be an increased inventory of homes for sale, which will really help fuel the demand for homes.

You should expect a slower appreciation rate (5.8% in gains after 2015) and less competition among cash-offer investors. One thing to keep an eye on is interest rates. They're predicted to go up in 2015, and many expect them to hover around 4.5%, which wouldn't be so bad.

Thanks for tuning in once again! If you have any questions about real estate conditions going forward, or have questions about a more specific topic, give us a call or shoot us an email. We would love to hear from you!