No need for horoscopes, fortune tellers, palm readers, tea leaves, a psychic hotline or Madam so-and-so to predict the housing market in the future. Instead, the California Association of REALTORS® (C.A.R.) has the answers in its 2018 California Housing Market Forecast. The C.A.R. report was released this past week at the C.A.R. Expo, attended by nearly 6,000 people at the San Diego Convention Center (the C.A.R. Expo is the largest state real estate trade show in the nation).
With the economy expected to continue growing, housing demand should remain strong and incrementally boost California’s housing market in 2018, C.A.R. said. However, C.A.R. said a shortage of available homes for sale and affordability constraints will continue to be a challenge.
The California median home price is forecast to increase 4.2 percent to $561,000 in 2018, following a projected 7.2 percent increase in 2017 to $538,500.
“This year’s housing market can be told as a tale of two markets, the inventory constrained lower end and the upper end that’s non-inventory constrained,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “This trend is likely to continue into 2018 as active listings have declined across all price ranges for the past two years but is most obvious at the lower end.
“With tight inventory being the new ‘norm’ for the past few years and at least the upcoming year, we’ll continue to see fierce competition driving up prices, leading to lower affordability and weaker sales growth.”
C.A.R. also is expecting a modest gain in existing single-family home sales of 1.0 percent in 2018 year to reach 426,200 units, up slightly from the projected 2017 sales figure of 421,900. The 2017 figure is 1.3 percent higher compared with the 416,700 pace of homes sold in 2016.
“Solid job growth and favorable interest rates will drive a strong demand for housing next year,” said C.A.R. President Geoff McIntosh. “However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market.”
C.A.R. also said the average for 30-year, fixed mortgage interest rates will increase slightly to 4.3 percent in 2018, up from 4.0 percent in 2017 and 3.6 percent in 2016, but will still remain low by historical standards.
C.A.R.’s projections for median home prices this year are consistent with other real estate industry experts. CoreLogic said the San Diego County median price for single-family resales, condo resales and newly built homes in August was $535,000, which was lower than June’s figure of $545,000.
In other housing market news, San Diego County was ranked as the fifth “hottest” real estate market in the U.S. in September, with a typical home on the market only 39 days. San Diego moved up four places in the monthly ranking by the National Association of Realtors’ Realtors.com website. Nationally homes are on the market a median of 69 days, almost twice as long as in San Diego.
In other news from C.A.R, pending home resales in August declined 12.7 percent in San Diego County in a year-over-year comparison. August marks the end of the peak home-buying season, C.A.R. said. During the month, C.A.R. said that REALTORS® reported fewer floor calls, listing appointments, and client presentations, but open house traffic, however, remained strong.
According to C.A..R.’s recent Market Pulse Survey, fewer homes are selling below asking price. The share of homes selling above asking price increased from 29 percent a year ago to 31 percent in August, while the share of properties selling below asking price fell from 41 percent to 37 percent. The remaining 32 percent sold at asking price, up from 30 percent in August 2016. For homes that sold above asking price, the premium paid over asking price rose from 10 percent in August 2016 to 12 percent in August 2017. The 36 percent of homes that sold below asking price sold for an average of 12 percent below asking price in August, unchanged from a year ago.
Also, C.A.R. said the number of multiple offers is declining. About two-thirds (60 percent) of properties sold in August received multiple offers, down from 62 percent in August 2016, and the number of offers received was slightly down at 2.7 offers. The share of properties receiving three or more offers in August was 38 percent, compared to 42 percent a year ago.