Where is the Market Going?
One of the most common questions we get around here is, “Where is this market going?”
And we totally get why! Buying a house will most likely be the biggest purchase you make in your life, so wanting to know if you’re buying at the right time makes a whole lot of sense.
No one can predict the future. If I could I’d be a Power Ball billionaire and not writing this blog post for you nice people. But that doesn’t mean we can’t look at the existing data and make some intelligent guesses about what’s to come in this market.
Here are some predictions for the 2018 California housing market that you will probably find interesting.
Prices Will Continue to Rise
No matter who or what you want to give the credit to, the economy as a whole is doing pretty good. When the economy is doing better and more people have jobs, they tend to be willing and need to buy housing.
This creates your typical supply and demand issue. More people need housing but supply can’t keep up so prices will continue to increase.
While many economists expect California housing prices to rise, they don’t expect that they will grow at the same rate as they did in 2017 according to the OC Register. “It’s slowing down,” economist and former Chapman University President Jim Doti said of price appreciation.
Sales Will Increase But Not by Much
From the same OC Register article, we get news that sales are expected to slow down across the state.
California Association of Realtors Chief Economist Leslie Appleton-Young believes that sales have plateaued across the state. This could be due to limited inventory and the above mentioned increase in prices. At some point, there is only so much people can afford.
This slowdown in sales may be offset by an increase in renting though.
Sales Will be Fast
Real estate analysis website Red Finpredicts that homes will sell even faster than they did in 2017. During last year a quarter of homes sold in less than two weeks during peak buying season.
With continuing low levels of inventory, you can expect 2018 to be just as fast if not faster.
Mortgage Rates Will Increase
With the Federal Reserve backing off the size of its asset portfolio, which includes $1.7 trillion in mortgage securities, it’s no surprise that interest rates will be going up.
This might be a reason why we can expect home sales to flatten. With higher interest rates and higher home prices, we will see higher mortgages which will put some people out of the market.
No Bubbles Yet
While it’s darn near impossible to call a bubble correctly, the smart people over at Red Fin think we’re looking good. Many people are very concerned with a bubble popping again after seeing how fast the market is moving and how much prices are increasing.
Sale-to-list price ratios and buyer debt ratios all look much better than back in 2006 when the last bubble erupted. These are both very good signals that we’re not looking at a bubble and things will be fine.
Talk to a Professional
While we can serve you up all of the economic predictions out there, everyone’s situation is unique. If you’re interested in finding out how your local market is doing and if now the time is right to buy, it’s time to talk to a professional.
Jamec Blue has over $10 million in sales and with a host of happy clients, he’s the real deal. If you have questions, Jamec can answer them! Give him a call at 510-541-7489 or visit https://calpre.com/today for more information.