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California 2015 Housing Market Forecast Preview

2015 Housing Forecast for California
2015 Housing Forecast for California

With more available homes on the market for sale, California’s housing market will see fewer investors and a return to traditional home buyers as home sales rise modestly and prices flatten out in 2015, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2015 California Housing Market Forecast.”

The C.A.R. forecast sees an increase in existing home sales of 5.8 percent next year to reach 402,500 units, up from the projected 2014 sales figure of 380,500 homes sold. Sales in 2014 will be down 8.2 percent from the 414,300 existing, single-family homes sold in 2013.

“Stringent underwriting guidelines and double-digit home price increases over the past two years have significantly impacted housing affordability in California, forcing some buyers to delay their home purchase,” said C.A.R. President Kevin Brown. “However, next year, home price gains will slow, allowing would-be buyers who have been saving for a down payment to be in a better financial position to make a home purchase.”

“Moreover, prospective buyers should know that it’s a misperception that a 20 percent down payment is always required to buy a home. There are numerous programs available that allow consumers to buy a home with less down payment, including FHA loans, which lets buyers put down as little as 3.5 percent,” continued Brown.

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 3 percent in 2015, after a projected gain of 2.2 percent in 2014. With nonfarm job growth of 2.2 percent in California, the state’s unemployment rate should decrease to 5.8 percent in 2015 from 6.2 percent in 2014 and 7.4 percent in 2013.

The average for 30-year fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels.

The California median home price is forecast to increase 5.2 percent to $478,700 in 2015, following a projected 11.8 percent increase in 2014 to $455,000. This is the slowest rate of price appreciation in four years.

“With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “While the Fed will likely end its quantitative easing program by the end of this year, it has had minimal impact on interest rates, which should only inch up slightly and remain low throughout 2015. This should help moderate the decline in housing affordability we saw occur over the past two years.”

“Additionally, the state will continue to see a bifurcated market, with the San Francisco Bay Area outperforming other regions, thanks to a more vigorous job market and tighter housing supply.”

FHAs Back to Work Program Waives Waiting Times

(Courtesy NKS Financial)

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Purchase again sooner than you think

The Federal Housing Administration (FHA) recently announced its “Back to Work” program, which is giving individuals who suffered a long period of hardship during the recent housing crisis a second chance to prove they can carry a mortgage and own a home.

The program will waive many of the waiting periods associated with a significant “economic event” such as bankruptcy (Chapters 7 and 13), short sale or foreclosure.

Potential candidates may be first-time or repeat home buyers, and the program can be used for the 203K rehab loan. It must be approved by an FHA lender, and as some lenders are choosing not to participate, you may want to contact your mortgage professional for more information on this.

Eligibility

To participate in the program, individuals must be able to demonstrate they’ve recovered fully from the “event”, and document the fact that they did have a household income loss of at least 20 percent for a period of at least six months that coincided with the “event.” They also need to prove current, stable and documentable employment to qualify.

As well, they need to demonstrate a 12-month positive payment history, and this specifies on-time payment of all mortgage and installment debt. There is some latitude for credit card debt, but it is slight.

Counseling sessions

Applicants also must attend counseling sessions before being able to participate in the program. This is usually a one-hour session with a HUD-approved counselor, and was designed to help participants prevent the “economic event” from happening again.

City of Elk Grove Lands 1,500 New Jobs

Elk Grove, CA – Elk Grove will soon be home to a state agency headquarters, bringing more than 1,500 high-quality jobs to the Elk Grove economy and helping balance the city’s jobs-to-housing ratio.

The California Correctional Health Care Services announced the new location for its

headquarters in the Laguna Springs Corporate Center at 9260 Laguna Springs Drive. The city estimates that the jobs will generate up to $4 million dollars in economic benefit to the City.

“California Correctional Health Care Services selecting Elk Grove as their new home means high paying, high-quality jobs for the City of Elk Grove, and is a tremendous shot in the arm for our local economy,” said Mayor Steven Detrick. “This is a significant accomplishment for the city, and represents a true collaboration between the Elk Grove City Council and city staff.”

For more than three years, Mayor Steven Detrick and Councilmember Gary Davis served on an Ad Hoc Committee tasked with attracting state agencies to Elk Grove.

According to state officials, the headquarters moving to this location spreads more of the state business throughout the region, helping to balance commute routes. Approximately 700 cars will be removed from heavy northbound 99 and I-5 commutes. Roughly 50 percent of Correctional Health Care workers already live in Elk Grove, South Sacramento and the Pocket area.

“Consolidating headquarters operations for Correctional Health Care will increase our efficiency, reduce expenses, and contribute to building the health care culture I believe we need for the organization to succeed. The selection of this location is the first step in these efforts,” said Federal Receiver J. Clark Kelso.

Correctional Health Care officials were drawn to the site because of free parking, plenty of retail and consumer services within walking distance, and public transit services.

“With nearly one out of every three workers in Elk Grove employed by the State of California, the city has worked tirelessly to bring state offices to Elk Grove,” said Councilmember Gary Davis. “The new California Correctional Health Care Services facility located in Elk Grove will relieve traffic on the freeways, improve air quality, and be an impetus for even more job creation.”

The City of Elk Grove has been focusing efforts to balance the job-to-housing ratio and attract state jobs to Elk Grove. The city has sponsored legislation requiring state agencies to take into account the location of employees when considering a move.

The city was also the first in California to introduce an incentive program targeting state office buildings. The program is designed to bring state jobs closer to where their employees reside by offering incentives that may be used towards relocation costs, fee reductions, construction costs, building improvements, monthly rent, or even transportation or other quality of life subsidies for the employees. The program was recently expanded to include federal office buildings.

California Correctional Health Care Services is in negotiations with the Laguna Springs Corporate Center. If the negotiations are successful, it’s anticipated a new lease will be executed and the phased move will begin next year.

For more information about the City of Elk Grove’s economic development program, visit www.openuptoelkgrove.org or contact Heather Ross at 916-478-3686 or hross@elkgrovecity.org.

For more info about CCHCS jobs go to http://cphcs.hodesiq.com/index.asp