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Posted on November 28, 2018 - 03:41 PM
by Rene Ferland
The California Association of Realtors released it’s 2019 California Housing Market Forecast.
“A market shift is underway.”
The following are a few of the high points:
According to C.A.R., “In 2019 the number of single family home sales is predicted to have a modest decline of around 3.3%. Home prices are predicted to temper next year, interest rates will likely rise, and compound housing affordability issues. Would be home buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back housing demand and hamper home sales in 2019” said C.A.R. President Steve White.
It appears the 30 year fixed mortgage interest rate will rise to 5.2% in 2019, but will still remain low by historical standards. The California median home price is forecast to increase statewide by a modest 3.1% to $593,450 in 2019, following a projected 7% increase in 2018 to $575,800. Most of the East Bay has seen an increase in excess of 7% in 2018. “The surge in home prices over the past few years due to the housing supply shortage has finally taken a toll on the market” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Despite an improvement in supply conditions, there is a high level of uncertainty about the direction of the market. That is affecting home buying decisions. This psychological effect is creating a mismatch in price expectations between buyers and sellers, which will limit price growth in the upcoming year.”
Outmigration, which is the result of the state’s housing affordability issue, will also be a primary concern for our housing market in 2019. With rising interest rates and the high housing costs, Californians are leaving the state. According to C.A.R.’s report, 28% of the homebuyers moved out of the county and state in which they previously resided. The substantial surge in homebuyers fleeing the state is reflected by the home sales decline in Southern California, which was down on a year-over-year basis for the first 10 months of 2018. The outmigration trend was even worse in the Bay Area, where housing is the least affordable in the state, 35% of homebuyers moved out because of affordability constraints. Outmigration will not abate as long as home prices are out of reach and interest rates rise in the upcoming year.
What does all this mean? California is still the best place in the Union to live. There is still a silver lining in our real estate future. Nearly 500,000 homes will sell in California next year. The key to your future is to read the market correctly and price your home appropriately if you’re planning a move in the next 12 months.
Below is a look at the current number of homes for sale and pending in our local market.