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C.A.R. releases its 2020 California Housing Market Forecast

by CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

C.A.R. releases its 2020 California Housing Market Forecast

Economic uncertainty and affordability issues to subdue California home sales

LOS ANGELES (Sept. 26) – Low mortgage interest rates will support California’s housing market in 2020 but economic uncertainty and affordability issues will mute sales growth, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

C.A.R.’s “2020 California Housing Market Forecast” sees a small uptick in existing single-family home sales of 0.8 percent next year to reach 393,500 units, up from the projected 2019 sales figure of 390,200. The 2019 figure is 3.1 percent lower compared with the pace of 402,800 homes sold in 2018.

The California median home price is forecast to increase 2.5 percent to $607,900 in 2020, following a projected 4.1 percent increase from last year to $593,200 in 2019.

“With interest rates expected to remain near three-year lows, buyers have more purchasing power than in years past, but they may be reluctant to get off the sidelines because of economic and market uncertainties,” said C.A.R. President Jared Martin. “Additionally, an affordability crunch will cut into demand in some regions such as the Bay Area, where affordability is significantly below state and national levels. These factors together will subdue sales growth next year.”

C.A.R.’s forecast projects growth in the U.S. gross domestic product of 1.6 percent in 2020, after a projected gain of 2.2 percent in 2019. With California’s 2020 nonfarm job growth rate at 1.0 percent, down from a projected 1.5 percent in 2019, the state’s unemployment rate will tick up to 4.5 percent in 2020 from 2019’s 4.3 projected figure.

The average for 30-year, fixed mortgage interest rates will dip to 3.7 percent in 2020, down from 3.9 percent in 2019 and 4.5 percent in 2018 and will remain low by historical standards.

“California’s housing market will be challenged by changing migration patterns as buyers search for more affordable housing markets, particularly by first-time buyers, who are the hardest hit, moving out of state,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “With California’s job and population growth rates tapering, the state’s affordability crisis is having a negative impact on the state economically as we lose the workers we need most such as service and construction workers, and teachers.”

In fact, according to C.A.R.’s 2019 State of the Housing Market Study, nearly a third (30 percent) of those sellers who planned on repurchasing said that they will buy their next home in another state outside of California — the highest level since 2005. Older generations were more likely to buy outside of California as 37 percent of baby boomers and silent generation planned on repurchasing in another state, but only 30 percent of Millennial sellers planned to do the same.    

 

2020 CALIFORNIA HOUSING FORECAST

 

2015

2016

2017

2018

2019p

2020f

SFH Resales (000s)

409.4

417.7

424.9

402.8

390.2

393.5

% Change

7.00%

2.00%

1.70%

-5.20%

-3.10%

0.80%

Median Price ($000s)

$476.30

$502.30

$537.90

$570.00

$593.20

$607.90

% Change

6.60%

5.40%

7.10%

6.00%

4.10%

2.50%

Housing Affordability Index*

31%

31%

29%

28%

32%

32%

30-Yr FRM

3.90%

3.60%

4.00%

4.50%

3.90%

3.70%

p = projected
p = projected
f = forecast

* = % of households who can afford median-priced home

Leading the way ...® in real estate news and information for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

C.A.R. releases its 2017 California Housing Market Forecast

by CALIFORNIA ASSOCIATION OF REALTORS

C.A.R. releases its 2017 California Housing Market Forecast
 

View the complete forecast here: 2017 California Housing Market Forecast

 

Market Will Improve In 2016

by

Here is the market outlook from the California Association of Realtors:

Already strong spring home buying season in sight

by California Association Of Realtors

Already strong spring home buying season in sight

Following the winter lull, forward looking market indicators suggest we may be seeing a strong spring home-buying season. Data on pending home sales from California Association of Realtors (C.A.R.) shows a 23 percent increase in activity between December and January. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually become closed sales transactions one to two months later.

Where is demand coming from? There has been a significant pent-up demand for homes. Following the recession, household formation in California fell dramatically. The latest estimate from C.A.R. showed that some 575,000 fewer households were formed in California between 2008 and 2012 due to economic hardship. If the household formation trends continued at the pace seen before the recession, California would have not only that many new households, but 60 percent of those households would be homeowners. That means we are missing about 345,000 new homeowners in California. With improving economic conditions and solid employment growth across the state, pend-up demand for homes is evident in the pending sales index for January C.A.R. recently released. Nevertheless, what are the obstacles that potential buyers may be facing? Well, inventory of homes listed for sale is still at historical lows. January C.A.R. numbers showed that raw inventory increased 12.1 percent from December of 2013 and increased 6.7 percent from a year ago. Unfortunately, the supply of homes in the lower price segment of the market continues falling, while the inventory of homes priced at million dollars and higher increased. Why is the inventory so low? There are several reasons worth mentioning. On one hand, following the collapse of the housing market, home prices along with historically low interest rate led to a very affordable housing market. Those who were able to take advantage certainly did and absorbed a great share of the lower priced inventory. In the meantime, the supply side of the inventory did not see any progress. California has seen a dramatic decrease in new construction. Permits for new housing units are half of what is needed to meet the household creation trend. Secondly, there are still about 15 percent or nearly 1.3 million of California’s 8.65 million homeowners underwater. Thirdly, foreclosure pipeline which comprised a large share of home sold over the last few years has dried up and not many foreclosures are available for sales. And lastly, the investors, both large and small scale, who recently bought homes, are renting them instead of flipping them. That may change as prices continue to improve. The low inventory environment, however, may be good news for sellers. Potential sellers who have been contemplating putting their home up for sale may want to take advantage of the low inventory of homes available for sale and list their homes.

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Tom Troli
Realty One Group
Offices in
Claremont & San Clemente CA
(949) 429-9209
BRE #01193758
 
Tom Troli
 
Successfully Helping Sellers & Buyers Since 1995
Broker-Associate, GRI, CRS,
DRE License # 01193758