Experts Predict California Home Prices Will Continue to Rise in 2018

Experts predict California home prices will continue to rise in 2018. Why such good news? Because the housing recovery is projected to continue for a sixth straight year in 2018. The other news is that the gains will be more modest than in the past, according to the California Association of Realtors.
Leslie Appleton-Young, chief economist for the organization, says a lack of homes for sale, due to construction not keeping pace with the market, as well as other factors, will keep home prices rising for the next three to five years. But, she warns affordability constraints stop the increases from rising higher because of the gap between income increases and home prices.
“The slower income growth is really hampering the ability of first-time buyers to get into the market,” Appleton-Young said in a presentation at the Marriott Marquis San Diego Marina as part of the annual CAR Expo.
She predicts that statewide affordability will drop to 26%: down from 51% in 2012 when the recession was still having a significant effect. The association measures affordability by checking if the monthly housing payment does not exceed 30% of gross monthly income.
Sales of homes have stayed at about the same level for years — which doesn’t make a lot of sense if you consider substantial job growth and historically low mortgage interest rates. But, fewer homes on the market, along with increasing prices have stopped sales from picking up.
In the next few years, California’s population will grow — up to an estimated 40 million people in 2018 from 39.4 million in 2016 — and so the need for more housing will increase, too. International buyers are expected to continue to be interested in California in the coming years because prices here are still cheaper compared to other places around the world. Although, there will likely continue to be a reduction in Chinese buyers as that nation’s government cracks down on how much money leaves the mainland.
I invite you to compare the future predictions to the current real estate trends here in Santa Barbara. Just check out the Market Updates created by the California Association of Realtors, or my own Market Action Reports and monthly newsletters, you will easily see what’s been happening here through November of this year.
If you’ve been on the fence about listing your home in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities now is the time to act because California home prices will continue to rise in 2018. Please call me at 805.886.9378 or email me at Cristal@montecito-estate.com and I can enlighten you on what the prediction of California home prices in 2018 means for you!