The California Association of Realtors (“CAR”) has released its forecast of the housing market for 2020, and the general conclusion is that while the low rates will help sales in California, the skyrocketing costs of homes paired with the unstable nature of the global economy will work to offset some of that growth.
Specifically, the CAR expects single-family home sales to increase by about .8%, while the median home price is expected to increase by 2.5% ($607k). The fact of the matter is, with historically low interest rates, which are expected to drop to 3.7% in 2020 (at least for the 30-year fixed-rate mortgage) purchasers can “afford” more (because the cost of a loan will be cheaper over its lifetime), and the California housing market is suffering from an “affordability” crisis.
This “affordability crisis” has led a large number of home sellers to decide that the next home they purchase will be outside of California; specifically 30% of people who planned on selling and purchasing a new home.
At first blush, this may seem like bad news for sellers hoping to get top-dollar for their Encino, Tarzana, Sherman Oaks, or Studio City homes, but we read it through an optimist’s view; once the global economy achieves some stability (e.g., we reach a trade deal with China) the housing market should be more predictable – this allows for even more growth in value (and a 2.5% increase in property value is nothing to sneer at either).
At the Chernov Team we understand that knowledge is power, and knowledge of what 2020 will bring the housing market is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.