California Median Home Price Continues to Rise

As if buying a home in the Golden State was not already difficult enough, experts expect the median home price for California to increase 4.2% in 2018. An increase of such magnitude would put prices over $561,000, increasing the gap between California and the rest of the continental United States.

A median home price at that level would also lower affordability to historic numbers. The chief economist for the California Association of Realtors predicts that affordability would fall to 26 percent. To put that in perspective, affordability during 2012 near the end of the recession was at 51 percent.

One of the major contributing factors to rising prices continues to be the lack of inventory. This is due in part to the scarcity of land, but experts are also be attributing the rise to slow construction. In Orange County alone, the number of multifamily housing permits dropped 40.5 percent in the first half of 2017.

Sales have stayed relatively level for the past several years despite an improving economy and lowered interest rates. The California Association of Realtors cites low house inventory and increasing prices as contributing factors that have limited an increase in sales.

With California’s population expected to grow to 40 million people next year, the need for housing will increase as well. Many young people have decided to leave California as they are simply unable to afford a home here. This had led to a population boom in cities such as Scottsdale, Arizona and Austin, Texas.

While the Millennial exodus is expected to continue, don’t expect housing to be any easier to come by. It seems that international buyers will continue to purchase in California. This is due to the fact that it is still less expensive than other places around the world. There is hope that a crackdown on money leaving the mainland by the Chinese government could ease international purchases.

Written by Jessica Colt
By |2017-10-19T18:28:58+00:00October 19th, 2017|Residential, Southern California Real Estate Report|0 Comments

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Kevin is the Digital Marketing Coordinator at Class Realty Group.