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California Housing Market Predictions 2017 – 2018: Prices Cooling?

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Recent California housing market predictions suggest that home prices could be rising more slowly across the state. This is a positive trend that could ease some of the affordability issues that have arisen in places like the Bay Area and Southern California.

Here’s a fresh round of California housing market predictions through 2017 and into 2018.

California Housing Market Predictions from Two Leading Sources

According to the housing economists at Zillow, home prices in California are expected to rise by around 1.5% over the next 12 months. This market prediction was issued in March 2017 and extends through March 2018. It also marks a big change from the last 12 months. Over the last year or so, home prices in the state rose by around 7%. So this latest housing prediction for California suggests that the market is cooling, at least where prices are concerned.

Related: Cost of buying a home in California

At the time this article was published, on March 31, 2017, the median home value in the state was $490,100. According to Zillow: “California home values have gone up 6.9% over the past year and Zillow predicts they will rise 1.5% within the next year.”

In January, the California Association of REALTORS® (CAR) offered a more robust prediction for the California housing market in 2017. They forecast that the median home price for the state would rise by 4.6% during 2017, compared to a gain of 5.4% last year. But their prediction also suggests that prices are rising more slowly today, especially if you look back a few years.

Related: Will house values rise or fall in 2017?

This is a big change from the rapid price gains that occurred during 2012 and 2013, when the state’s housing market was rebounding. You can see this clearly in the chart below, which was shared by the California Association of REALTORS®.

California home price trends

This chart shows the amount of home-price appreciation (or depreciation) from one year to the next, going back more than a decade. Specifically, it shows the percentage of price change from year to year.

For example, in September of 2013, you can see that home prices in California rose by nearly 40%, compared to the same month a year earlier.

On the right side of the chart, you’ll notice how the year-to-year gains have gotten much smaller. This could be a kind of normalization occurring in the California housing market. Home prices dropped sharply during the housing crisis and recession, and then rose sharply during the recovery. Today, house values are still trending upward, but at a slower and more “normal” pace.

This is what’s driving the more modest California housing market predictions for 2017 and 2018. Prices have nearly risen to peak levels in many cities across the state, and they are now rising more slowly — or even leveling off — as a result.

Let’s look at some California housing market predictions for major cities across the state. These forecasts and measurements were issued by Zillow in March 2017. So the column labeled “next 12 months” looks ahead through March 2018.

CityLast 12 months (measured)Next 12 months (predicted)
Long Beach6.8%0.8%
Los Angeles8.6%1.3%
San Diego5.3%0.0%
San Jose4.1%1.1%

Sacramento: One of the nation’s hottest markets?

Don’t get too wrapped up in the specific numbers here, especially in the forecast column on the right. The point is that these projections reflect what many other analysts have said recently — home prices in California will likely rise more slowly over the next year than in previous years. And at a more sustainable pace.

Disclaimer: This article contains 2017 to 2018 housing market forecasts for California, as well as predictions for individual cities. This information was gathered from third-party data providers and forecasters not associated with our company. We have presented it here as an educational service to our readers.

Need a loan? Do you plan to buy a home in California sometime soon? Need a mortgage loan to help finance your purchase? We can help. Bridgepoint Funding has been helping borrowers in the state for more than 16 years. We offer competitive rates on a variety of loan options. Contact us with any questions you have, or to receive a rate quote.

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