I was at the PWR Tech Fest on Saturday and spent 30 minutes listening to an economist talk about the house market for the next 5 years. After 5 years wallowing in the bloodbath that was the last 5 years of the housing market, I was prepared for the worst. Just the opposite...it was all good, but still sobering news. The bottom line: starting in earnest next year, we will have home appreciation, and by 2015, it may be double digit. What will cause this?
1) Home inventory has peaked. Starting the 3rd quarter of this year, fewer homes will be coming on the market.,
2) REOs and short sales have peaked. Technically they peaked in 2010, but each year from this point on, they will decrease 20% a year. Right now they comprise over 40% of the market, in 2012 it will be 30%, in 2013 22%, 2014 15%, 2015 10%...
3) The economic recovery of SoCal has already begun. It will be in full swing in 2012.
4) New home starts will rise, rates may rise (but consumers will opt for adjustables) and optimism will build.
5) By 2014 we will have equilibrium in the market and there will actually be a "seller's market".
The fundamentals are there and we have languished for over 5 years in this misery. I look forward to my agents and myself going on listing appointments with good news and sellers selling because they choose to, not because they have to.
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