5 Southern California Real Estate Predictions and Trends for 2015

Here at First Team we’re busy preparing for 2015 – analyzing the current market, getting a pulse on buyers and sellers in the market and building marketing strategies. So we decided to ask our agents for their insight on what to expect in our local markets for 2015.

We love to share our market knowledge so here are some of our predictions and things to look out for in the 2015 Southern California real estate market:

  • Mortgage rates are likely to rise
  • Home prices should remain stable
  • The market will begin favoring buyers
  • Pricing will be sellers #1 priority
  • Keep a close eye on affordability

Mortgage rates

There is some debate as to whether mortgage rates will rise or fall this year, however the majority consensus is that rates will go up in 2015.

The Federal Reserve has kept mortgage rates artificially low through quantitative easing – its program of monthly purchases of government and mortgage bonds to swell the size of bank reserves in the economy by the quantity of assets purchased.

It is likely that as the economy picks up, the Fed will loosen its grip and allow rates to rise in order to offset inflation. Increasing interest rates has been the policy for bringing down inflation in the past and we predict could be a strategy used this year as well.

Stable prices

The majority of agents predict that there will be little to no change in home prices in 2015. The market is continuing to normalize and we’re expecting an appreciation rate of no more than 7%.

Prices usually rise and fall with interest rates, however 2015 could be the exception. Some local areas that are in high demand may see prices go up, specifically high-end markets. However, at the lower end of the market if interest rates go up, buyers could get priced out of the market and in order to sell, these market’s prices are likely to remain very close to this year’s prices.

Buyer’s market

Although the economy has improving at a healthy rate, the real estate sector has been lagging because buyers have been slow to enter the market. Move-up buyers and first-timers across the board have been unable to afford new homes because of quick price gains and stagnant salaries as the economy comes back from the downturn.

To entice buyers, government agencies are making home buying easier and more affordable in 2015, priming the market for prospective buyers. Here’s a quick breakdown of each leg up the government is giving buyers:

  • Lower FHA insurance premiums by 0.5 percent to help price millions of buyers into the market
  • Fannie Mae and Freddie Mac will back low down payment loans as low as 3 percent
  • Artificially low mortgage rates, currently well below 4 percent

The emerging buyer’s market could mean the power to set market prices has shifted. With fewer buyers on the market, they will be the ones to set price expectations. It’s possible many buyers in fact believe prices will be coming down and therefore don’t feel the urge to move quickly – willing to wait for a better price.

Pricing for sellers in 2015

Sellers who got used to the meteoric price gains after the market crash may be surprised by the shift toward a buyer’s market.

Sellers in the past have been in the driver’s seat, however that doesn’t appear to be the case any longer. Entering the market high and waiting for prices to catch up could be a very risky strategy.

We haven’t had a “normal” market for a long time and there may be a period of adjustment as homes sit on the market for a longer period of time while sellers readjust. Buyers are unlikely to pay one penny more than they believe the property is worth.

That’s why pricing will be the number one important factor for sellers to focus on in 2015. Determining a fair market price based on your specific local area could be the difference between watching your home sit on the market, and finding the right buyer.


Seller pricing and the affordability programs should help buyers take advantage of the new buyer’s market. We predict these programs will continue in 2015, however it’s impossible to know how long.

That’s why it’s imperative for homebuyers to take advantage of this somewhat artificial buyer’s market. To cash in on these excellent values, homebuyers will have to be ready to make a move otherwise they could lose out. The Fed can’t keep rates low forever and given enough time, history tells us prices will rise again with the ever-improving economy.

For more insight into the 2015 SoCal real estate market and your local neighborhood market, chat with First Team agent. With over 30 offices in Southern California, there’s a local expert near you. Find an agent online or reach out and we’ll set you up with a top agent in your area.

Call 888-870-1142 or

Email clientservices@firstteam.com

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