Average Home Prices in California to Rise
Like most real estate markets, California’s housing market is affected by a continued lack of supply, affordability issues, rising interest rates, and very high home prices. We’re in a sales slump.
What do we make of the negative reports and is there anything positive here for buyers and sellers? We know listings are growing, but with construction subdued, how long will it take to dry up available stock? What will happen to the California housing market in 2019? The economy, wages, and housing demand will resume and Faangs will shine (Google, Disney, Apple, Hewlett Packard, Facebook).
For buyers with funds, active listings are on the rise. Active listings are up 30% in Southern California. And for sellers prices are expected to rise. Once the economy resumes its strong growth, and jobs growth, we may see stronger price growth than expected.
California Cities Have Unique Demand
Housing market statistics vary depending on which city you are in. Migration out of dense, high priced communities to other cities creates these price variations.
Highly populated regions such as San Francisco/Bay Area, Los Angeles, and San Diego saw dropping sales in December. Prices in most districts however rose with Central coast communities seeing a strong 9% growth.
NAR said home prices rose 7.9% last year Zillow believes home prices will further rise 7.3% this year. Cities with the highest price growth are Los Angeles, Tehama, Santa Barbara, Yuba, Merced, Santa Cruz and San Bernardino. The Bay Area is getting hit the hardest, with its lowest performance since 2010.
“30,300 new and resale home transactions closed escrow in California during December 2018. The number of homes sold was 20% lower than a year earlier, amounting to 7,400 fewer sales in the single month of December, and total annual sales volume 4% below 2018. 2018 ended with 442,000 home sales in California — 19,900 fewer than took place in 2017 (-4.3%)” — from Firstuesday California report.
Predictions about California’s metro housing markets by CAR Realtors sees a slower market with homeowners hanging onto their homes and buyers unable to afford to buy. Without good locations to move to, and high prices for what’s available means everyone is staying put and fewer pending sales. CAR believes this will subdue sales throughout 2019.
The condo segment of California’s housing scene is where the action is. Prices of condos keep rising due to the low availability and high prices of detached homes.
A crash is far off with home equity strong and delinquency rates very low.
This graphic of southern California home stats shows just how strong the drop in sales has been.
Realtors sees a slower market in 2019 with homeowners hanging onto their homes. Without good locations to move to, and high prices for what’s available means everyone is staying put. CAR believes that will subdue sales throughout 2019.
Realtors will need better strategies on how to get people to sell their homes.
China Tariffs and 2019 Growth
If you’ve read the 2019 jobs report, you can understand the transition all states are in, including California. Jobs are returning, but the best is still yet to come.
China trade tariffs and US business repatriation could stimulate California’s economy and encourage more home building. You can view the California jobs stats. The question is about how long that process could take. The transition this fall is reducing exports and increasing imports which is obviously not good for the economy. By late spring, that will change.
The Jan 1st and Mar 1st China tariff dates will stem the tide of imports and stimulate US production. You can read in more detail about local/federal political influences for the California market, and how it affects the rental market in the state. California unemployment has hit record lows, real earnings are up, and mortgage rates are rising, which feeds into price demands.
Housing Predictions for 2019 in California
CAR’s 2019 California Housing Market Forecast projects a decline of over just over 3% in single-family home sales next year, at 396,800 sold units, slightly less 2018’s expected year end sales figure of 410,460 and that is 28,000 units less than 2017’s total sales.
Zillow expects California home prices to rise from $554,000 currently to $589,000 in October of 2019. Zillow giave California’s housing markets a 9.6 health rating overall and sees a price growth rate of 8.6%. Oddly, we’re seeing almost 1/5th of homes being sold with a price cut from previous sold price. The average home rental in California is $2500 per month.
California Home Price Growth 2017 to 2018 by County
|California County||Sold||Median Price 2017||Median Price 2018||% Change YoY|
|Contra Costa County||1050||$570,750.00||$550,000.00||3.8|
|Los Angeles County||5291||$581,000.00||$570,000.00||2|
|San Diego County||2643||$550,000.00||$540,000.00||1.9|
|San Francisco County||363||$1,325,000.00||$1,160,000.00||14.2|
|San Joaquin County||792||$386,500.00||$350,000.00||10.4|
|San Luis Obispo County||247||$599,000.00||$585,000.00||2.4|
|San Mateo County||407||$1,250,000.00||$1,200,250.00||4.1|
|Santa Barbara County||293||$545,000.00||$466,250.00||16.9|
|Santa Clara County||1146||$1,000,000.00||$1,000,000.00||1|
|Santa Cruz County||144||$727,000.00||$658,500.00||10.4|
Above California housing data courtesy of CAR.org
How California Home Prices have Grown
This animated chart above, from Calmatters shows how California’s home prices have grown. The attraction of California from business owners and new residents is too much to abate. With home prices expected to rise to $589,000 on average, the real CA housing market stats are more dramatic.
California Housing Market Update
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