Market Update | C.A.R.’s 2017 California Housing Market Forecast

posted on December 8th, 2016 | filed under: Buying Strategies, Market Update, NoCo SD Market Conditions, Uncategorized

trends-at-a-glance-nov-2016Following a dip in home sales in 2016, California’s housing market will post a nominal increase in 2017, as supply shortages and affordability constraints hamper market activity, according to the “2017 California Housing Market Forecast,” released today by the CALIFORNIA ASSOCIATION OF REALTORS ®’ (C.A.R.) .

The C.A.R. forecast sees a modest increase in existing home sales of 1.4 percent next year to reach 413,000 units, up slightly from the projected 2016 sales figure of 407,300 homes sold. Sales in 2016 also will be virtually flat at 407,300 existing, single-family home sales, compared with the 408,800 pace of homes sold in 2015.

“Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said C.A.R. President Pat “Ziggy” Zicarelli. “The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales. As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 2.2 percent in 2017, after a projected gain of 1.5 percent in 2016. With California’s nonfarm job growth at 1.6 percent, down from a projected 2.3 percent in 2016, the state’s unemployment rate will reach 5.3 percent in 2017, compared with 5.5 percent in 2016 and 6.2 percent in 2015.

The average for 30-year, fixed mortgage interest rates will rise only slightly to 4.0 percent in 2017, up from 3.6 percent in 2016, but will still remain at historically low levels.

The California median home price is forecast to increase 4.3 percent to $525,600 in 2017, following a projected 6.2 percent increase in 2016 to $503,900, representing the slowest rate of price appreciation in six years.

“With the California economy continuing to outperform the nation, the demand for housing will remain robust even with supply and affordability constraints still very much in evidence. The net result will be California’s housing market posting a modest increase in 2017,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity.”

OCTOBER SALES STATISTICS

SINGLE-FAMILY HOMES

Year-Over-Year

• Median home prices increased by 9.0% year-over-year to $561,500 from $515,000.

• The average home sales price rose by 10.2% year-over-year to $707,091 from $641,456.

• Home sales rose by 6.3% year-over-year to 2,079 from 1,956.

• Total inventory_ fell 1.3% year-over-year to 8,288 from 8,396.

• Sales price vs. list price ratio rose by 0.3% year-over-year to 98.0% from 97.7%.

• The average days on market fell by 12.1% year-over-year to 39 from 45.

Month-Over-Month

• Median home prices improved by 2.1% to $561,500 from $550,000.

• The average home sales price rose by 0.0% to $707,091 from $706,866.

• Home sales down by 1.7% to 2,079 from 2,114.

• Total inventory_ dropped 4.7% to 8,288 from 8,693.

• Sales price vs. list price ratio dropped by 0.0% to 98.0% from 98.1%.

• The average days on market increased by 0.2% to 39 from 39. CONDOMINIUMS

Year-Over-Year

• Median home prices increased by 9.9% year-over-year to $392,500 from $357,250.

• The average home sales price rose by 10.6% year-over-year to $470,882 from $425,661.

• Home sales rose by 5.2% year-over-year to 846 from 804.

• Total inventory_ fell 14.4% year-over-year to 2,520 from 2,944.

• Sales price vs. list price ratio rose by 0.5% year-over-year to 98.5% from 98.1%.

• The average days on market fell by 17% year-over-year to 34 from 41.

Month-Over-Month

• Median home prices improved by 1.7% to $392,500 from $386,000.

• The average home sales price rose by 2.2% to $470,882 from $460,854.

• Home sales down by 6.4% to 846 from 904.

• Total inventory_ dropped 7.5% to 2,520 from 2,725.

• Sales price vs. list price ratio increased by 0.3% to 98.5% from 98.2%.

• The average days on market dropped by 0.4% to 34 from 35.

_ Total inventory is active listings plus contingent or pending istings. Active listings do not include contingent listings.

posted by Jeff DeChamplain

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Jeff DeChamplain