Like much of the San Francisco Bay Area, home prices in San Jose, California rose significantly over the last two years. Strong demand and limited inventory have driven home prices north by a good measure.
But this real estate market could level off and cool down in 2017. This is based on several recent forecasts for the San Jose housing market in 2017.
A Million-Dollar Real Estate Market
Earlier this year, San Jose became a million-dollar real estate market. Literally.
According to a report published by the National Association of Realtors (NAR), back in August of this year, San Jose was the most expensive real estate market in the U.S. The city had a median home price of $1.085 million.
That made it the first city where house values averaged more than $1 million, and even put it ahead of San Francisco (which had a median price of $885,600 during the same period).
San Jose housing market forecasts for 2017 suggest that prices might have reached peak levels, and that they could level off over the coming months.
San Jose Housing Market Forecast for 2017
San Jose home prices have risen steadily over the last couple of years. But this trend could soon change. According to a recent housing market forecast for San Jose, prices could hold steady during 2017, or even decline.
In November 2016, the economic research team at Zillow reported that home values in San Jose, California rose by 5.4% during the 12-month period ending in November 2016. Looking forward, however, they expect to house prices in the city to drop slightly between now and the end of 2017.
According to the company’s forecast: “San Jose home values have gone up 5.4% over the past year and Zillow predicts they will fall -0.3% within the next year.
This is similar to the 2017 housing market forecasts being issued for other California cities, in the sense that is predicts a significant cooldown ahead.
The Affordability Factor (or Lack Thereof)
Nationally speaking, the job market and the broader economy are in pretty good shape. And 30-year mortgage rates are still hovering below 4%, on average. So why are the 2017 housing market forecasts for San Jose suggesting a slowdown? According to one expert, it has to do with affordability — or the lack thereof.
In a September article in the San Jose Mercury News:, CoreLogic research analyst Andrew LePage said:
“The Bay Area eked out a very small year-over-year gain for home sales. Now why is that the case when the job market’s doing well and interest rates are still incredibly low? Once again, it’s because of affordability and constraints [in the housing market].”
The buyer pool is smaller today than in the past, due to rising home values. This is why some cities across the Bay Area are expected to level off over the coming months. And San Jose appears to be on that list.
Disclaimers: This article includes real estate market predictions and forecasts. Such statements were provided by third parties not associated with our company. We have presented them here as an educational service for our readers.