Real Estate Blog

Home inventory shortage and falling affordability to persist in 2016

Leslie Appleton-Young is vice president and chief economist for the California Association of Realtors.
Leslie Appleton-Young is vice president and chief economist for the California Association of Realtors. SPECIAL TO THE BEE

The California housing market has recovered with sales and prices expected to gain more ground in 2016, according the annual housing forecast released Thursday by the California Association of Realtors.

The California housing market has recovered with sales and prices expected to gain more ground in 2016, according the annual housing forecast released Thursday by the California Association of Realtors.

But a shortage of houses for sale and falling home affordability will persist, said Leslie Appleton-Young, the association’s vice president and chief economist. “It’s not an easy market, every transaction is tough,” she said.

Nothing unexpected came out of the association’s annual forecast for the market next year. California home sales are anticipated to increase 6.3 percent in 2016 to 433,000 homes sold compared to the projected 2015 year-end figure of 407,500 houses sold.

The median home price is also expected to rise 3.2 percent to $491,300 next year up from a projected $476,300 at the end of this year, the slowest price appreciation in five years, Appleton-Young said.

While inventory is tight in areas like San Francisco, demand in less expensive areas like the Central Valley and Solano County will remain strong.

There is about 3.6 months of inventory — homes available at the current pace of sales – in the Valley, which is much higher than most other areas of the state, Appleton-Young said. San Francisco, for example, has 2.3 months of inventory.

The Valley’s median home price in August was $276,900, a 7 percent increase over last year and sales are up 12 percent year-over-year.

Kings County was pointed out for having the most affordable share of homes for sale to median-income households, about 67 percent of the inventory, while San Francisco came in last with only 2.1 percent of its inventory at an affordable price.

“The Central Valley was the last part of the state to really join the recovery,” Appleton-Young said, “and is enjoying some very good numbers at this point.”

BoNhia Lee: 559-441-6495, @bonhialee

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