Scott Gibson’s Real Estate Predictions for 2014
There is no bubble when it comes to residential real estate prices, as some have predicted. Despite the continued printing of money by the federal government, home prices have still not kept up with other asset classes let alone inflation. The same people that predict we are in a bubble and will wait until prices come down are the same people that said the stock market was in a bubble at 10,000 and were going to wait until it came down to buy in. We are a long way off from peaking in real estate prices in Los Angeles. I see them raising another 30%-40% within the next 5 years. Below are a handful of reasons to back my statement.
-The economy will continue to improve at a measured pace although higher taxes and healthcare costs will have moderating influence
-The stock market will continue to rise creating additional wealth. It may hit 18,000 by year end
-The Mexican economy will grow dramatically as will the stock market creating a new class of wealthy people to buy Southern California real estate
-Real estate will continue to rise in value as inflation increases and the economy improves
-Interest rates will rise to close to 6% for 30 year loans, variable rate loans will become more common place as their price deferential from 30 year fixed rate loans increases
-Lenders will get more aggressive and will charge higher fees
-Condominium appreciation will start to outpace single family homes as homes become more and more expensive
-Single level residences will continue to gain in popularity
-View properties will command a premium price
-Inventory will open up as more and more people take advantage of the increasing prices to trade up or downsize
-Foreign investment will continue to increase, and we may start to see more money from the Japanese as their stock market continues its strong gains from 2013
-A threat in California is the possible attack on Proposition 13 which has limited property tax increases to those properties that are sold. Expect the first salvo to be against business properties, reinforcing California rank as the worst state in the nation to do business
All in all, 2014 should be a great year for residential real estate!