The big question we all have at the moment: Are we going to see a continued boom, a bust or something in the middle?
Affordability has been impacted by the rising interest rates over the past 6 months. However, Chief Economist and Senior Vice President at Metrostudy, Mark Bound, suggests the rise is insignificant in comparison to past trends. He predicts mortgage rates could cap at 5.8% in 2020. A repeat of the last housing bubble is highly unlikely due to tighter lending practices and slower economic growth.
According to Chief Economist from the California Association of Realtors, Leslie Appleton-Young “home sales in California are projected to rise to 428,300 units in 2018, a slight increase of 1.0 percent from 2017. Tight supply and low housing affordability continue to hinder market growth and put upward pressure on home prices. The statewide median price of existing single-family homes is expected to reach $582,000, an increase of 8.2 percent in 2018 when compared to the prior year”.
Boud says, overall the current economy is healthy, with 2.4 million jobs being generated in the past 12 months alone. As this unemployment rate decreases, the demand for housing increases. Housing starts are also stable, projected to increase steadily before plateauing to roughly 1.345 million in 2020.
The future of the housing market is never clear, however there are signs things are slowing slightly. This in itself presents opportunities as a slower market can present excellent opportunities to buy and if you are looking to buy and sell, you may be doing so with less competition and profit from taking action in a market when some are choosing to wait. As always, every market is different that that is why it is imperative to speak with a local agent who is an expert in real estate and can guide you through the intricacies that we experience across all different types of markets.