The holiday season is fast approaching, with the end of the year right on its heels. That means a lot of home buyers in California are starting to look ahead to 2019. And many of them have the same kinds of questions:
Will 2019 be a good year to buy a home in California? What’s the market expected to do next year?
Here’s the short answer: California’s economy has improved steadily over the last few years, and home prices are expected to continue rising. So one could easily argue that a home purchase is a sound investment. But affordability is still an issue for buyers in some markets, including much of the Bay Area.
Will 2019 Be a Good Time to Buy in California?
Statewide, the median home value in California rose to around $540,000 as of October 2018. That was an increase of roughly 6% from the same month last year.
That’s the first thing buyers should know about buying a home in California in 2019. Housing costs have risen over the last few years. And they’re still climbing in most cities across the state.
Looking forward, most housing analysts and economists are predicting that prices will continue to rise throughout 2019. At least in most parts of the state.
On October 11, 2018, the California Association of REALTORS® put out a news release that offered some real estate predictions for 2019. Here’s one of those predictions:
“The California median home price is forecast to increase 3.1 percent to $593,450 in 2019, following a projected 7.0 percent increase in 2018 to $575,800.”
The housing research team at Zillow predicted even bigger gains in 2019. Granted, these projections are the equivalent of an educated guess. So we probably shouldn’t get too wrapped up in the exact numbers being projected here. It’s the broader consensus that’s more important. And the consensus is that home values in most parts of the state will likely continue to climb throughout 2019.
So in that regard, now could be a good time to buy a home in California. If these forecasts turn out to be accurate, those buyers who put off their purchases until later in 2019 could encounter higher housing costs.
Moving Toward a Buyer’s Market
Real estate markets across California are undergoing a gradual shift right now. Rising home values have reduced demand in some areas, and that’s leading to price cuts from sellers. (Price reductions were practically unheard of just a couple of years ago.)
In August 2018, nearly 40% of home sellers reduced their asking prices. This kind of thing usually occurs when the seller doesn’t get many offers at the original list price. So they reduce the asking amount to bring in more offers. When these reductions become more common, it’s generally a sign of a shifting real estate market.
All of which begs the question: Will California shift from a seller’s to a buyer’s market in 2019?
Leslie-Appleton Young, chief economist for the state’s Realtor association, pointed to such a shift in a recent statement: “Would I call this a buyer’s market? No,” she said. “But are we moving in that direction? Yes.”
Getting back to the question at hand: Will 2019 be a good year to buy a home in California? For many buyers, it could very well be. Prices are expected to climb throughout next year, according to several industry forecasts. So those who get in early could avoid paying higher housing costs down the road.