OC Home prices gains to taper

I ran across this article today in the OC Register. The title of the article sounds scary at first, but really is good news. I believe slow steady growth is what we want in our housing market. We all seen what can happen when our markets jump to sharply. 

Love to hear all your thoughts on it

OC Home prices gains to taper

California home prices and sales are expected to continue rising next year, but price gains will be more modest as a more traditional market takes hold, according to the California Association of Realtors' 2014 housing forecast.

The 2014 median house price house is projected to rise to $432,800 statewide, up 6 percent from this year's expected all-year median of $408,600.

By comparison, this year's single-family home median is expected to end the year up 28 percent from 2012 levels, according to the forecast.

Realtor economists also project that California home sales will rise 3.2 percent in 2014 to 444,000 sales, the most homes sold in eight years. The 2013 sales tally is expected to fall about 2 percent short of 2012 levels.

“The housing market continues to be one of, if not the, brightest spots in the economy,” said association Chief Economist Leslie Appleton-Young.

She cited a “shift in the tenor” of the market away from foreclosures, short sales and other distressed transactions and back to “equity” or “retail” home sales.

For example, bank-owned homes, which accounted for 60 percent of home sales in 2009, represented just 3 percent in August, Appleton-Young said. Short sales have fallen to 10 percent of transactions. At the same time, sales of non-distressed homes went from 31 percent of sales in 2009 to 86 percent in August.

“This is a year where the traditional market dominates,” Appleton-Young said.

Mortgage rates also are on the rise. The association predicted that the interest rate on a traditional 30-year, fixed-rate mortgage will increase to 5.3 percent next year, up from an average of 4.1 percent in 2013. For a median-priced home, that increase amounts to a $236 increase in monthly mortgage payments.

Appleton-Young also cited data showing that foreign buyers accounted for 8 percent of sales in a Realtor survey earlier this year, the highest level in the annual survey's 35-year history. Foreign buyers see real estate in the San Francisco Bay area and parts of Los Angeles as ideal havens for their money. “This is a phenomenon that will only continue to grow,” she said.

Appleton-Young, however, said the overall economic recovery remains sluggish. The gross domestic product and job growth are subpar. She worries about the Federal Reserve's effort to taper its “quantitative easing” program of purchasing mortgage securities and the uncertainty caused by the federal government shutdown.

“There are lots of cyclical challenges and structural challenges facing our economy,” she said. “There's a lot of collateral damage to work through.”