(Post image by Decker Bullock Sotheby’s International Realty)
Reports from both California Association of Realtors (C.A.R.) and the National Association of Home Builders (NAHB) point to further appreciation in the housing market for 2016.
As I stated in my interview with Marin IJ, the low inventory is one of the main factors for the increase in housing prices. According to our OCT market report inventory was still at only 61% of the level experienced during the peak of 2007. Average prices were up over 22% from the peak, with price per square foot, a more accurate measure, at 12% over 2007 figures. This is partly due to the dramatic increase in luxury homes sales. Home sales over $10 million, where our brokerage represents 80% of the market in the price point, has tripled from last year. The number of properties sold over $5 million is up 22% from last year.
The forecast for further appreciation in the housing market by the economist who participated in the National Association of Home Builders recent webinar is based on several factors including pent-up demand and the economic growth.
Some of the highlights from the forecast:
- Home equity has nearly doubled since 2011 and now stands at $12.5 trillion.
- Mortgage interest rates are expected to rise over the near-term, averaging 4.5 percent in 2016 and 5.5 percent in 2017.
- Single-family starts are projected to rise 11 percent by year end to 719,000.
- Single-family production is projected to increase an additional 27 percent in 2016 to 914,000 units.
- Multifamily starts are expected to rise 9 percent to 387,000 units this year and post a modest 3 percent decline to 378,000 units in 2016.
- Residential remodeling activity is forecasted to increase 6.8 percent in 2015 over last year and rise an additional 6.1 percent in 2016.
The forecast by NAHB was shared by the California Association of Realtors recent market forecast.
The report sees an increase of 6.3 percent in existing home sales next year to reach 433,000 units, up from the projected 2015 sales figure of 407,500 homes sold. It also sees 2015 sales to be up 6.3 percent from the 383,300 existing, single-family homes sold in 2014.
As for the state’s unemployment rate, the forecast predict a decrease to 5.5 percent in 2016 from 6.3 percent in 2015 and 7.5 percent in 2014.
The California median home price is forecast to increase 3.2 percent in 2016, following a projected 6.5 percent increase in 2015.
“The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth.” Said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.
Decker Bullock Sotheby’s International Realty