2016 California Housing Market Forecast

According to the California Association of Realtors^®, 2016 California Housing Market Forecast,” released on October 8^th 2015, housing market will continue to improve into 2016; but the residential market will be faced with the scarcity of available homes and the decrease in affordability factor.

California Association of Realtors, forecasts an increase in the residential sales of 6.3 percent, reaching 433,000 homes in 2016 compare to 407,500 homes sold in 2015. Also home sales in 2015 will increase by 6.3 percent from 383,300 homes sold in 2014.

“Solid job growth and favorable interest rates will drive a strong demand for housing next year,” said C.A.R. President Chris Kutzkey.  “However, in regions where inventory is tight, such as the San Francisco Bay Area, sales growth could be limited by stiff market competition and diminishing housing affordability. On the other hand, demand in less expensive areas such as Solano County, the Central Valley, and Riverside/San Bernardino areas will remain strong thanks to solid job growth in warehousing, transportation, logistics, and manufacturing in these areas.”

Average fixed mortgage interest rates for 30-year is forecasted to rise slightly to 4.5 percent but as we know it is will still remain at all time low interest rates.

Median home prices in California are projected to increase 3.2 percent to $491,300 in year 2016. This is following a predicted 6.5 percent increase in 2015 to $476,300.  This would be the slowest increase in five years.

“The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, the global economic slowdown, financial market volatility, and the anticipation of higher interest rates are some of the challenges that may have an adverse impact on the market’s momentum next year. Additionally, as we see more sales shift to inland regions of the state, the change in mix of sales will keep increases in the statewide median price tempered.”