2019 Real Estate Market Forecast
Updated: Jan 12, 2019
California Home Price Growth to Moderate in 2019
· California’s Median single-family home sales price expected to reach $593,400 by the end of 2019, an annual gain of 3.1%.
· More than one-third of homebuyers in Southern California and Bay Area are forecast to move out of the county they lived in by the end of 2018.
· In 2019, California’s Gross Domestic Product is projected to increase by 2.4%, with unemployment rate holding steady at 4.3%.
The California Association of Realtors’ (CAR) 2019 Housing Forecast expects the median single-family home price will end this year at $575,800, up by 7.0% on annual basis. Mortgage rates are forecast to end in 2018 at 4.7%, reducing the number of Californians who can afford a home to 28%.
The state’s median home price is projected to rise by 3.1% in 2019 to $593,400. A far cry from the 27.5% growth record in 2013. Assuming that mortgage rates move up to 5.2% by the end of 2019, just one-quarter of Californians will be able to afford to buy a home. Next year, home sales are projected to decline by 3.3%, almost identical to 2018’s projected decrease.
CAR President Steve White said, “While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues. Would-be buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back demand and hamper home sales in 2019.”
Housing affordability challenges are expected to drive out migration trends in 2019, as Californians move to less expensive counties, or out of the state entirely. This year, 28% of homebuyers are projected to move out of the counties in which they currently reside. In Southern California and the Bay Area, the number ticks up to 35%.
While worsening affordability is unwelcome news for California home shoppers, the state’s economy should remain on solid footing through 2019. CAR projects that the state’s gross domestic product will grow by 2.4%, down slightly from 2018 expectations. The job market should continue to thrive, with unemployment rate holding steady at 4.3% by the end of the year.