Richmond, CA Housing Market Forecast: Will 2017 Bring Smaller Gains?

Like many cities in the Bay Area, the Richmond, California housing market has been very active lately. Home prices have risen steadily over the last few years, with double-digit gains in the last 12 to 18 months alone.

But that could change in 2017, according to several housing analysts and economists. Next year, home prices could rise more slowly than what we’ve become used to. Here are some 2017 real estate market forecasts for Richmond, California, along with a look at current trends in the area.

Current Housing Market Trends, Summer 2016

The Richmond, California real estate market has experienced a supply shortage for the last two or three years. There just haven’t been enough homes for sale to satisfy demand. This created a seller’s market scenario and drove home prices north.

Much of this was the work of investors. Back in 2013, Richmond Confidential published an article about the surge of investor purchases in the area. “From 2009 to 2012, cash buyers [such as investors] purchased nearly half of all homes sold in Richmond, according to real estate firm DataQuick,” they said.

As a result of this investment activity, housing inventory shrank considerably. And this happened at a time when demand was rising among “regular” (non-investor) home buyers as well. This supply-and-demand imbalance resulted in the significant price gains we’ve seen in recent years.

Currently, the median home price in Richmond, CA is around $410,000. This is based on data from both Trulia and Zillow.

But recent forecasts and predictions for the Richmond housing market suggest that home-price appreciation could slow considerably in 2017. This would mirror a broader cooling trend that’s happening across the Bay Area.

Richmond, CA Real Estate Forecast for 2017

According to the real estate information company Zillow, home prices in Richmond, CA rose by more than 10% over the last year. This is based on their “Zestimate,” a proprietary measurement of house values.

But we probably shouldn’t expect such large gains in 2017. The company’s housing market forecast for Richmond calls for less appreciation in 2017, with prices rising by less than 5% year over year.

In their words: “Richmond home values have gone up 15.5% over the past year and Zillow predicts they will rise 2.6% within the next year.” This was their assessment as of July 2016.

Related: Should I buy a home now or in 2017?

Freddie Mac Outlook: Rising Mortgage Rates Ahead?

The government-controlled mortgage buyer Freddie Mac publishes a long-range forecast for mortgage rates, and revises it each month to account for new developments. According to their latest forecast, published in July 2016, mortgage rates could begin to rise later this year and continue rising gradually in 2017.

The chart below shows Freddie Mac’s forecast for 30-year mortgage rates between now and the end of 2017. These are the average rates they expect during each quarter.

As you can see, their economists expect mortgage rates to rise gradually later this year and also in 2017. When this article was published, in July 2016, the average rate for a 30-year mortgage was 3.48%, according to Freddie Mac. So, if their prediction turns out to be accurate, it would mean an increase of more than 100 basis points (1.0%) by the start of next year.

But this is just an educated guess. There are many factors that influence mortgage rates, and they change constantly. So we probably shouldn’t get too wrapped up in the exact numbers shown above. The takeaway here is that the company’s economists expect rates to rise gradually over the coming months. So it’s something to consider, if you’re planning a home purchase.

Continuing Your Research

Buying a home is a major investment, and it warrants extensive research on your part. Information is the key to success. This outlook for the Richmond, California real estate market is intended to give you some insight into current housing conditions, and how those conditions might evolve over the coming months.

We encourage you to continue your research beyond our website, in order to make a well-informed purchasing decision. In other words, this article is just a starting point. You have more homework to do!

Disclaimer: This article includes forward-looking statements (predictions and forecasts) regarding the Richmond, CA real estate market. Such statements were provided by third-party sources not associated with our company. This material has been provided for informational purposes only.