Are you planning on buying a home in California in 2019? Wondering if now is a good time to buy? Then read on. Below, we’ve gathered some of the most important trends California home buyers should know about in 2019.
What to Know About Buying a Home in California in 2019
While real estate conditions vary from one market to the next, there are some interesting trends happening across the state of California. More inventory is coming onto the market, giving home buyers more options. Mortgage rates dropped during the latter part of 2018, creating a money-saving opportunity for mortgage shoppers. And loan limits have gone up for 2019.
Here are five things you should know about buying a home in California in 2019:
1. Buyers in some markets will have more homes to choose from in 2019.
Here’s some much-needed good news for home buyers in California. After years of record-low inventory levels, we are now seeing more homes come onto the market. This trend is happening in many cities across the country, but it’s particularly noticeable in California.
In a December 2018 press release, the real estate information company Trulia reported:
“Housing markets in the West experienced the nation’s largest inventory gains despite the large dip in supply. Among the 100 largest U.S. metros, six of the markets with the biggest surge in inventory from last year were in California, most notably in San Jose (66.6 percent), San Francisco (36.5 percent) and Oakland (29.2 percent).”
These inventory gains were primarily driven by growth in starter and trade-up homes, as opposed to high-end luxury homes. That’s especially good news for people who are planning to buy their first home in California in 2019. This group, in particular, should have more options to choose from when house hunting this year.
2. Buyers can take advantage of low mortgage rates, at least for now.
Low mortgage rates will give buyers a strong incentive to buy a home in California in 2019. While rates rose during the first part of 2018, they declined steadily during the last two months of that year.
During the first week of January 2019, the average rate for a 30-year fixed mortgage loan was 4.51%. That was its lowest level (to date) since August of the prior year.
But for those thinking about buying a home in California in 2019, a sense of urgency might be warranted. Analysts from the Mortgage Bankers Association and other groups have predicted that lending rates could edge upward later in 2019.
Home prices are still rising in most California real estate markets as well. As a result, buyers who postpone their purchases until later in the year could encounter higher housing costs.
3. Buyers have higher loan limits to work with in 2019.
At the end of 2018, federal housing officials announced that they were raising loan limits for California and other states in 2019. This applies to FHA, VA and conventional mortgage loans.
Conforming and VA loan limits range from $484,350 to $726,525, for a single-family property. FHA loan limits in the state range from $314,827 to $726,525 in 2019, depending on the county.
Higher financing is available for borrowers who need it, as long as they have sufficient income to repay the debt. When a loan exceeds the limits mentioned above, it’s known as a jumbo loan.
4. Buyers could have more negotiating leverage in 2019.
Real estate markets across California have favored sellers over buyers for the past few years. Limited inventory and strong demand have created “seller’s market” conditions in major cities and small towns alike.
While most markets still lean toward sellers, there is a shift beginning to take place.
Here’s one sign of what could become a statewide shift in 2019. It’s from a November 2018 article in The San Francisco Chronicle:
“October is typically a big month for price reductions, as sellers try to close deals before the market slows way down between Thanksgiving and early February. But the number and percentage of homes with a price cut surged last month to their highest level for the month of October since at least 2012 in the Bay Area and 2011 statewide.”
Additionally, homes are sitting on the market longer in many parts of the state. We have a long way to go before California becomes a buyer’s market. But current trends suggest that those who buy a home in California in 2019 could have more negotiating leverage, compared to those who purchased in previous years.
5. Buyers can gain confidence from a stronger job market.
California’s unemployment situation has improved steadily over the past eight years or so. Despite trade tensions and stock market turbulence, California’s job market grew in 2018. Statewide, employers added 30,700 positions, according to the Employment Development Department.
California’s unemployment rate held steady at 4.1%, the same as in September and October, and the lowest rate in over four decades.
Those are statewide averages. In San Francisco, unemployment was down to 2.5% as of November 2018. San Diego was also in the 2% range during that same month.
A strong job market helps to support the housing market by giving buyers the financial means to purchase a home, and to keep up with their monthly mortgage payments. It also gives them the confidence to make a purchase in the first place.
So there you have them, five reasons why 2019 could be a good year for California home buyers.