g during 2015. Some market analysts believe that we are moving out of a seller's market and into a buyer's market by 2016. What is the difference?
The real estate market is cyclical -- which is why you may have heard the term, "real estate cycle." Several key factors influence this cycle, including interest rates, employment growth, investment growth, construction and even immigration. All of these influence whether there is a buyer's market or a seller's market.
A buyer's market is when there are many more homes for sale than there are buyers. As a result, prices may drop over time as homeowners become eager to sell their property.
A seller's market is when interest rates are low so there are many qualified buyers and not many homes for sale. We are currently in a seller's market. In a seller's market, buyers must make quick decisions and face multiple offers on the home they have chosen to buy and prices can rise due to multiple bids on the same home.
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 California Association of Realtors Vice President and Chief Economist Leslie Appleton-Young. "And 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."
So what does all this mean to Newark? It means that right now you are living in the best kept real estate secret in the Bay Area. There is no way to predict when we will move into a buyer's market but it is easy to say that home prices will continue to rise in Newark. Whether you choose to buy or to sell your home next year it will benefit you. Next month I will address the expansion that Newark is planning and how it will affect real estate prices in our city. So welcome in 2015 with the knowledge that your home is going to be your best investment this year.
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Adam Modzeleski is a real estate professional with Rainbow Funding and Realty, located on Thornton Avenue in Newark for more than 30 years.
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