On the highway to a real estate recovery

The trail to a recovery in home sales volume is blazed by auto sales. Willingness to purchase a car is historically indicative of the population’s likelihood of making other major purchases, specifically real estate.

Auto sales volume in California, including leases, is level with one year earlier as of July 2015. The latest data for home sales volume in California shows home sales volume is up 18% from one year earlier. However, high prices remain a discouragement to homebuyers. On top of that, mortgage rates will rise by early 2016 due to action by the Federal Reserve (the Fed) to increase the short-term interest rate. Rising rates will put downward pressure on both the housing and auto market.

Home sales volume won’t rise substantially until 2018 in response to strong job growth.


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