The Central Valley is leading California’s housing growth thanks to high affordability.
The trend is expected to continue next year with the Valley to see a moderate increase in home sales and prices outperforming coastal cities where skyrocketing prices have caused affordability to plummet, according to the 2017 California Housing Market Forecast released by the California Association of Realtors on Thursday.
Overall, the California real estate market will edge up slightly in 2017 after a relatively flat year, said Leslie Appleton-Young,vice president and chief economist.
Here’s what to expect in real estate next year:
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▪ Central Valley home sales are forecast to increase 2.2 percent. The median home price is expected to go up 4.1 percent to about $294,000.
▪ California sales are looking to increase 1.4 percent. The median home price is forecast to go up by 4.3 percent to about $525,000.
▪ Mortgage interest rates are expected to float around 4 percent.
▪ Affordability statewide, those who can afford to buy a median-priced house, is forecast to stand around 29 percent.
Appleton-Young calls this period the “new normal.” We’re in the fourth year of the new normal, past the foreclosure and short sale glut, but not yet in a robust real estate market, she said.
While mortgage interest rates remain low, first-time homebuyers are finding it hard to buy and millennials are chasing jobs out of California to more affordable places. The number of homes for sale remains low, about a three to four month supply, while demand continues to climb.
And more homeowners staying put in their homes, Appleton-Young said. Homeowners are remodeling their houses into their dream homes and baby boomers are staying put. Realtors surveyed by the association said homeowners are living in their homes about 10 years, the longest time recorded in the more than a decade of the survey.
“You had a couple years coming out in 2008/2009 when things were just booming. Since 2010, the market, I think, has been OK,” Appleton-Young said.
“I think we’re going to be dancing in this range until something unanticipated happens.”