California’s housing market will post modest gains next year amid tight supplies and the lowest housing affordability in six years according to the California Association of Realtors forecast
Sales of existing single-family homes – which make up about 68 percent of the overall market – are projected to rise 1.4 percent in 2017 to 413,000 transactions.
“The net result will be California’s housing market posting a modest increase in 2017,” said Leslie Appleton-Young, the Realtor association’s chief economist. “The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity.”
Housing affordability will fall as price gains continue to outpace pay raises.
In Southern California, house sales are projected to be virtually unchanged this year and next from 2015’s sales pace, the forecast said. Sales are projected to rise 0.4 percent this year and 0.7 percent next year.
Mortgage interest rates are forecast to rise next year, but not by much. The average rate for a 30-year fixed mortgage is expected to be 4 percent in 2017, compared to this years near-record low of 3.6 percent