California Housing Market Forecast 2019
January 2, 2019 4:00 pm
California Housing Market Forecast 2019
The housing market is a major indicator of the strength of our economy. When the economy is strong, people are more confident about the future and are more inclined to buy houses and make upgrades to their current homes. Conversely, when there is uncertainty, new home construction, remodeling and housing sales can stagnate.
Californians in the last few years have seen a staggering and steady rise in the housing market, creating a benchmark for financial prosperity for many in the South Bay. However, 2018 marked a turn with home sales registering at a lower rate for the first time in four years. As economic concerns rise, here is what to expect in 2019 according to the California Association of RealtorsⓇ:
According to the C.A.R Senior Vice President and Chief Economist Leslie Appleton-Young, “The surge in home prices over the past few years due to the housing supply shortage has finally taken a toll on the market. 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 and will limit price growth in the upcoming year.”
Home Sales:
A modest 3.3% decline in existing single-family homes sales for 2019 is expected, with sales projected at 396,000 units, down from 410,460 units in 2018. The 2018 figure is also 3.2% lower compared to the 424,100 number of homes sold in 2017.
Interest Rates:
The average for 30-year, fixed mortgage interest rates will rise to 5.2% in 2019, up from 4.7% in 2018 and 4.0% in 2017. However, they will still remain low by historical standards.
Median Home Prices:
The California median home price is forecast to increase to $593,450 in 2019. This marks a 3.1% increase following the previously projected 7% increase in 2018, where the median home price rose to $575,800.
Affordability Index:
Due to the rise in interest rates and median home prices, the percentage of Californians that are able to afford homes, also known as the affordability index, is set to see a decline from 28% in 2018 to 25% in 2019.
Although, we are set to see a marginal decrease in the housing market in 2019, no drastic changes are currently projected. If you are curious to see how this upcoming market change will affect you, your home value, and your purchasing power, contact Levine Homes for more information.
