After years of choppy seas, the East County real estate market looks to set sail in far more tranquil waters in 2014. While there is plenty of good news for both risk-averse buyers and sellers, a few possible swells remain on the horizon that could require some precision navigation.

Rising Confidence Unlikely to Put Many Underwater

The past year provided some impressive gains for San Diego real estate -- and the California real estate market in general. DQNews.com reports an 18.2 percent increase in the median sale price for existing single-family homes over last October, and a 20.3 percent increase in the overall housing market. Following a colossal 28 percent increase in the median sale price across California in 2013, the California Association of Realtors is projecting a far more tempered increase of six percent in 2014.

In addition, they are predicting a 3.2 percent increase in the total number of homes sold despite a continued lack of available housing stock that wreaked havoc on home sales last year. Alan Nevin of Xpera Group estimates that the lack of new housing construction in San Diego over the past few years should boost existing housing values through at least 2015 as the market struggles to accommodate for population growth.

Residential Market Growth Will Finally Rescue Sinking Ships

With significant improvements in the economy and a decrease in the level of unemployment, struggling homeowners finally have a market to salvage their existing equity. Those worst hit by the housing bubble have likely already abandoned ship. Leslie Appleton-Young, vice president and chief economist for the California Association of Realtors, points to the positive indicator that sales in the distressed market have fallen from one in three sales to less than one out of five.

While it’s unlikely to result in hyper-competitive bidding wars, the buoyant and energetic market should rescue struggling homeowners still clinging to life before new housing stock becomes available in the coming years. Increased construction should also help to keep unemployment numbers down, providing plenty of move-down opportunities for those currently in over their head. Fiserv and Moody’s Economy.com forecast a 7.2 percent increase in median prices nationwide over 2010 levels by mid-2014. Further strengthening the seller's position in the coming year.

Swells on the Horizon that Could Raise Red Flags

Unfortunately, the real estate market is still highly susceptible to the whims and fancies of an often chaotic United States Congress as well as the all-looming presence of the Federal Reserve. Recent budget compromises should offer stability moving forward and protection from the pitfalls of fiscal cliffs and debt-ceiling debates. However, sweeping changes at the Federal level could still make big waves.Calls to taper the Fed’s QE3 monetary policy, which has them buying $85 billion a month in mortgage-backed securities, are mounting in the halls of power. Additionally, a number of tax-reform bills and proposals are splashing around in Congress that could impact every aspect of home-ownership -- including the elimination of real estate deductions for home mortgage interest and local property taxes as well as a host of other write-offs.

Expected Growth in Easy County

Despite possible sweeping changes, the real estate market in East County should show steady growth through 2014, furnishing home buyers and sellers with peaceful waters for making informed and calculated financial decisions.

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