California Housing Market Forecast for 2018
Posted October 18th, 2017 by juliahuntsman
The 2018 California Association of Realtors Housing Market Forecast was released at this month's annual trade show.
As low housing supply and affordability constraints continue, the 2018 California market is expected to have a "nominal increase" over 2017, up to 4.2% increase in median price, and mortgage rates for 30 yr fixed rate mortgage going to 4.3%.
The proposed tax reforms under the Trump Administration are projected to lead to fewer sales, by 3.4%, accompanied by a decline in home values due to homeowner reluctance to put house on market as homeownership advantages disappear for homebuyers. The housing supply could drop by 1.5% in the first year if this tax reform is implemented.
At the present, however, the California median price continues to rise, with the statewide median price at $565,330. This is still not up to the overall market peak in May of 2007 of $594,230. Orange County, however, has exceed that peak price by 1.8%, the only area in Southern California to do so. In the Bay Area, five counties have exceed the peak 2007 price by as much as 42% (San Francisco).
Housing inventory has declined everywhere, with the most inventory in the multi-million dollar market. The California housing turnover rate is less than the U.S. rate for single family homes--longtime homeowners are staying put for reasons including capital gains hits, and "where can I afford to go"? Another housing supply problem are the number of single family homes converted to rentals, in San Francisco estimated to be between 400,000 and 700,000 homes formerly owner occupied but now rented.
Housing affordability in California is now at 29%, and 28% for Los Angeles County, 21% for Orange County.
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The 2018 California Association of Realtors Housing Market Forecast was released at this month's annual trade show. As low housing supply and affordability constraints continue, the 2018 California market is expected to have a "nominal increase" over 2017, up to 4.2% increase in median price, and mortgage rates for 30 yr fixed rate mortgage going to 4.3%.
The proposed tax reforms under the Trump Administration are projected to lead to fewer sales, by 3.4%, accompanied by a decline in home values due to homeowner reluctance to put house on market as homeownership advantages disappear for homebuyers. The housing supply could drop by 1.5% in the first year if this tax reform is implemented.
At the present, however, the California median price continues to rise, with the statewide median price at $565,330. This is still not up to the overall market peak in May of 2007 of $594,230. Orange County, however, has exceed that peak price by 1.8%, the only area in Southern California to do so. In the Bay Area, five counties have exceed the peak 2007 price by as much as 42% (San Francisco).
Housing inventory has declined everywhere, with the most inventory in the multi-million dollar market. The California housing turnover rate is less than the U.S. rate for single family homes--longtime homeowners are staying put for reasons including capital gains hits, and "where can I afford to go"? Another housing supply problem are the number of single family homes converted to rentals, in San Francisco estimated to be between 400,000 and 700,000 homes formerly owner occupied but now rented.
Housing affordability in California is now at 29%, and 28% for Los Angeles County, 21% for Orange County.
- Median age for buyers - 45
- Median age for sellers - 57
- One-third of transactions sold above asking price, 6 out of 10 had multiple offers.
- The majority of first time and repeat buyers are in Southern California.
- Fewer international buyers, fewer buyers from China.
- Net cash gain to sellers highest since 2006.
- More sellers are moving out of California, but 38% are staying in the same county.
- List to sell ratio in Southern California at 98.9%.
- Lack of inventory considered one of the biggest challenges for the 2018 market, affordability another challenge. Total sales are projected to be only 1% higher than 2017.