The California housing market is expected to grow increasingly un-affordable next year, driving would-be home buyers away from high-cost coastal regions and toward the more inexpensive inland stretches of the state, according to an industry forecast.
The California Assn. of Realtors on Thursday predicted that sales will be more robust in the Central Valley and Inland Empire as families look for a home they can afford.
And as more and more families struggle to afford a home, price increases are expected to be more muted than in years past. The state’s median price is projected to end this year at $503,900, up 6.2% from last year. In 2017, prices should climb 4.3% to $525,600.
“Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” Pat Zicarelli, the association’s president, said in a statement.
The high cost of housing in California has become a growing political issue within the state. And it has spurred calls for increased funding for subsidized housing, as well as efforts to loosen building regulations so the private sector can quickly construct more residential units.
This week, two studies — one from UC Riverside and another from UCLA — warned that the state’s housing shortage threatens to put a drag on economic growth.
Despite those and other fears, the Realtors association predicted that the economy will keep improving and produce enough demand to nudge statewide home sales up 1.4%, compared to 2016.
In contrast, sales this year are projected to inch down 0.4% from 2015.
“The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity,” the association’s chief economist, Leslie Appleton-Young, said in a statement.