Annual Housing Market Forecast 2016

2015 was a great year in California Real Estate! Prices steadily soared while interest rates remained at an all time low. This coupled with minimal inventory levels created a market-favoring sellers through out the year. However, with growing global uncertainty and talks of an increase in interest rates, where will this leave us in 2016?

With the steady increase in market values of homes across California throughout the last few years, many are worried that we are entering another Housing bubble. Yet, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2016 California Housing Market Forecast”, California’s housing market will continue to improve into 2016! The C.A.R. forecast sees an increase in existing home sales of 6.3 percent next year to reach 433,000 units, up from the projected 2015 sales figure of 407,500 homes sold. “Solid job growth and favorable interest rates will drive a strong demand for housing,” said C.A.R. President Chris Kutzkey. The average for 30-year, fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels. According to C.A.R. Vice President and Chief Economist Leslie Appleton-Young, “The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth.”

Phew! All signs point to good news! Although, there will be a few hurdles to take into account as well. A shortage of homes on the market will continue to be an issue and a crimp in housing affordability will also persist, yet less than the previous year as the California median home price is forecast to increase 3.2 percent to $491,300 in 2016, following a projected 6.5 percent increase in 2015 to $476,300. This is the slowest rate of price appreciation in five years. Also, in regions where inventory is tight, such a San Francisco and the South Bay Areas, sales growth could be limited by stiff market competition and diminishing housing affordability. On the other hand, demand in less expensive areas such as Solano County, the Central Valley, and Riverside/San Bernardino areas will remain strong thanks to solid job growth in warehousing, transportation, logistics, and manufacturing in these areas.

So what does this mean for you and your needs in the housing market? Contact us today and we will help you make the real estate decision that is right for you!