What drives the real estate more than any other factor? Jobs.
What drives buyers from renting to buying? Increase in rents to the point where home ownership is attractive.
What drives buyers who plan to buy a home to buy now? Interest rates.
So now, some data to back all these ideas up.
From the LA Times report, “home prices are projected to turn around in 2012 — jumping 11.5% to $321,138 next year, then rising 10% more in 2013 to $353,411. The recovery is expected to run through 2017.” Here are graphs they showed on their post regarding California Home Price Recovery.
From the California Association of Realtors Economist Leslie Appleton Young’s prediction for 2012, “The California median home price will increase 1.7 percent in 2012 to $296,000 in 2012, according to the forecast. Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4 percent in 2011 to $291,000.”
According to The Economist Magazine’s writer Kari Smith, “My concern is over Owner’s Equivalent Rent. The data suggest to me that there is a shortage of housing in the United States. We should expect rents to begin rising in the near term. This will push up Owner’s Equivalent Rent which accounts for somewhere around 35% of core CPI.”
Interest rates are expected to begin creeping up between 0-.25% per month in 2012 according to the the November 2011 Federal Reserve Update. If you have questions about a specific housing market around San Jose, contact me. If you have questions about real estate, ask me now via my online chat link to the right of this post.