Is 2017 a good time to buy a house in California? Is this a good year to buy my first home in California? What is the real estate market like right now?
These are some of the most frequently asked questions among California home buyers, and we’ve done our best to address each of them below. Here’s what you should know about buying a house in California in 2017:
Is Now a Good Time to Buy a House in California?
If you’re planning to stay put for a while, and you have reasonably stable income, right now (in 2017) might be a good time to buy a house in California.
Mortgage rates are still historically low right now, though they rose a bit at the end of 2016. At the end of January 2017, the average rate for a 30-year fixed home loan was 4.19%, according to Freddie Mac. But industry watchers expect rates to rise gradually between now and the end of this year.
So that’s something to consider. California home buyers who postpone their purchases until later in 2017, or early 2018, will likely pay higher mortgage rates.
Home prices rose in most California cities over the last couple of years, but now they seem to be leveling off. This is a positive trend, because it suggests a return to normalcy and long-term stability. A cooling trend could also ease some of the affordability issues we’ve seen across the state.
The state’s job market has improved steadily since the recession. When it was last measured, in December 2016, the statewide unemployment rate was at 5.2%, which is a big improvement from the double-digit jobless rate seen during the recession.
So, is now a good time to buy a house in California? Should you buy a home this year, in 2017? Many of the macroeconomic signs point to yes. Of course, you have to make sure it’s a good time for you personally. Consider your long-term plans and your financial goals. Make sure owning a home will improve your quality of life, and not detract from it.
Should I Buy Now, or Wait Until 2018?
We talked about the long-range forecast for mortgage rates already, and how many economists expect rates to rise gradually over the coming months. This means that if you buy a home in California later in 2017, or in 2018, you might end up paying more interest on your loan. Granted, this is just a forecast, and forecasts don’t always pan out. But it’s worth considering at the very least.
Home prices are harder to predict, because they vary from one city and metro area to the next. Prices are expected to rise only slightly in some California cities in 2017. Overall, prices across California are expected to remain fairly stable over the next year or so. Long-term forecasts call for gradual appreciation over the coming years. So buying a home in the state is still considered a good investment.
So, should you buy a house in California now, or shelve your plans until later in 2018? This is a question that only you can answer, because much of it hinges on your financial situation and long-term plans. With that being said, the real estate market isn’t expected to change very much over the next year.
Renting vs. Owning in the Golden State
This brings us to the question of renting versus buying. Is it better to buy or rent a home in California right now? From a purely financial standpoint, the market actually favors buying over renting.
According to a 2016 study that was reported by MSN Money, owning a home in California was cheaper than renting. The study found that the statewide average monthly rent was $2,400, while the average mortgage payment among homeowners was $2,221.
The report stated:
“Three of the top five most expensive rental markets in the U.S. are in California: San Francisco, Oakland and San Jose, according to the Zumper National Rent Report. And another three cities in the state, including Los Angeles and San Diego, are among the top 25 highest-priced rental markets.”
Granted, home prices and rents vary widely based on locale. So this kind of analysis is best done at the local level. Statewide, however, there’s a strong case to be made for buying a home versus renting. Just remember to consider your long-term plans, lifestyle, and financial situation. Buying a house should improve your quality of life.
Keep reading: Here are five more things you should know about buying a home in 2017.