The California Association of Realtors (C.A.R.) has released its 2020 Housing Market Forecast highlighting the challenges ahead for California homebuyers.
Low mortgage interest rates will support California’s housing market in 2020, but economic uncertainty and affordability issues will mute sales growth.
“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,” he said. “These factors together will subdue sales growth next year.”
The median home price in California is forecast to increase by 2.5 percent to $607,900 in 2020. This figure will ultimately hurt first-time homebuyers as they struggle to afford the increasing costs of housing in the state. The median home price in Santa Barbara being nearly double the state median illustrates the affordability challenges we face locally.
“California’s housing market will be challenged by changing migration patterns as buyers search for more affordable housing markets, particularly by first-time buyers, who are the hardest hit, moving out of state,” said Leslie Appleton-Young, C.A.R. senior vice president and chief economist.
“With California’s job and population growth rates tapering, the state’s affordability crisis is having a negative impact on the state economically as we lose the workers we need most such as service and construction workers, and teachers,” said Appleton-Young.
While the path to homeownership can be challenging, with the proper planning and guidance, it can be a reality for most.
The Santa Barbara Association of Realtors recommends calling your Realtor to start a discussion about the most feasible path to ownership for you.
— Thomas Schultheis is with Berkshire Hathaway HomeServices California Properties, and can be reached at 805.729.2802 or SbRealtorTom@gmail.com.