Predictions for the 2020 California Real Estate Market

According to C.A.R. (the California Association of Realtors), the real estate market has been steadily improving despite its sluggish start at the beginning of 2019.  When you take this into consideration along with downward trending interest rates, the remainder of the year is looking pretty positive.  However, the predictions for the 2020 real estate market are not looking as favorable and indicate the strong possibility of a slowdown.

Housing experts contend that the improving California market could be short-lived as we approach 2020 based on several economic factors.  So, what does this mean for buyers and rental property investors? Here are our predictions for the California real estate market in the coming year:

Housing prices will decrease – since 2012, California housing values have been on a steady upward trend.  This trend has been attributed to a steadily decreasing inventory of available housing.  Since the start of the year, the increase of housing prices has been minimal and predictions for 2020 contend that the prices and values of housing will continue decreasing throughout the year.

Affordability will still be a major issue in California – despite predictions that prices on housing will drop in California in 2020, this is no way implies that they will become more affordable as a result.  Although we’ve been seeing a steady downturn in prices, people are still turning away from investing in the housing market.  Consequently, the desire to own a home in California is not as strong as the US home ownership rate.

Home inventory in California will improve – available homes throughout the US has fallen short of buyer’s demands throughout the US.  Fortunately, it appears we will see an improvement in the amount of available housing in California in 2020.  This is largely due to homes remaining on the market longer which in turn is increasing the number of active listings in every California region.

Home sales in California will drop – according to a recent report on California’s real estate market, a significant drop in home sales will trigger a decrease in housing prices and values (see above).  In fact, we’ve already seen housing prices faltering as home inventories and listing levels are steadily increasing.  Since the average California home sells for nearly $600k (higher in metro areas) the average consumer is unable to buy.

Rental rates in California are going to increase – when you take everything above into consideration, it’s easy to see why the average consumer will be forced to rent.  As a result, the law of supply and demand will cause rental prices to increase.  When you consider that rising per capital incomes aren’t keeping pace with rising housing costs, it all makes sense unfortunately.

For more information about California’s housing market or to discuss your needs with an experienced professional, contact Bridgepoint Funding today at (925) 478-8630.