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Economic Uncertainty, Affordability Issues to Subdue California Home Sales
Low mortgage interest rates will support California’s housing market in 2020 but economic uncertainty and affordability issues will mute sales growth, according to the California Association of Realtors’ (C.A.R.) “2020 California Housing Market Forecast.”
The report predicts a small uptick in existing single-family home sales of 0.8% next year to reach 393,500 units, up from the projected 2019 sales figure of 390,200. The 2019 figure is 3.1% lower compared with the pace of 402,800 homes sold in 2018.
The California median home price is forecast to increase 2.5% to $607,900 in 2020, following a projected 4.1% increase from last year to $593,200 in 2019.
“With interest rates expected to remain near three-year lows, buyers have more purchasing power than in years past, but they may be reluctant to get off the sidelines because of economic and market uncertainties,” said C.A.R. President Jared Martin. “Additionally, an affordability crunch will cut into demand in some regions such as the Bay Area, where affordability is significantly below state and national levels. These factors together will subdue sales growth next year.”
| 2020 CALIFORNIA HOUSING FORECAST | ||||||
| 2015 | 2016 | 2017 | 2018 | 2019p | 2020f | |
| SFH Resales (000s) | 409.4 | 417.7 | 424.9 | 402.8 | 390.2 | 393.5 |
| % Change | 7.00% | 2.00% | 1.70% | -5.20% | -3.10% | 0.80% |
| Median Price ($000s) | $476.30 | $502.30 | $537.90 | $570.00 | $593.20 | $607.90 |
| % Change | 6.60% | 5.40% | 7.10% | 6.00% | 4.10% | 2.50% |
| Housing Affordability Index* | 31% | 31% | 29% | 28% | 32% | 32% |
| 30-Yr FRM | 3.90% | 3.60% | 4.00% | 4.50% | 3.90% | 3.70% |
p = projected
f = forecast
* = % of households who can afford median-priced home
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Sale/Acquisition
