Southern California Real Estate Forecast 2017

Laura Insley's picture
Southern California Real Estate Forecast 2017

Happy New Year! Along with another year comes a new set of real estate trends. Even though forecasting is risky, and sometimes end up being wrong due to variable changes, it is still important to look ahead. Southern California, in general, will see some change as new government policies take effect. That means we will see a big shift in numbers for jobs, incomes, and taxes. Not surprisingly, it will also have a huge impact on the real estate market. Luckily, we have our real estate experts, Lorraine Thielen and Linda Hahn, to give us a sneak peek on what’s to come as we enter 2017.

Home Sales

Overall, we can expect to see an increase in home sales across Southern California, as the number of jobs and income for prospective homebuyers begins to rise. Though, it is important to note that everything is a variable with new government policies coming into play. 

Regionally, the more affordable areas, such as the Inland Empire and Central Valley, will more than likely outperform more expensive areas, like Orange County (OC), in terms of sales. This is mostly due to rising home prices and lack of home inventory in OC. According to Core-Logic, as of October 27th, 2016, OC home prices were up in 47 out of 83 zip codes versus last year’s numbers. Home prices in the least expensive OC zip codes (where the median price is $580,000) have increased 1% over last year and have risen 16% in the most expensive OC zip codes (where the median price is $705,000). We are likely to see this trend continue throughout 2017.

Home Rentals

After researching and analyzing economic indicators, the Southern California rental market is looking at another year of increased prices. The rise can be attributed to a couple of factors. For one, mortgage rates have been climbing, and it looks like they will continue to do so. This will make affordability quite challenging for those looking to purchase a home. For another, the pool of homes in inventory are actually pretty limited, and the houses that become available are getting pricier. For these reasons, the once prospective homebuyer is now forced into renting property. Thanks to supply and demand, landlords are happily hiking up their rent. 

Home Construction

Construction is looking positive for 2017. We will definitely be seeing new homes going up in every corner and every available plot of land. Even with all of the new inventory, however, it may not be enough to satisfy the market. As more and more millennials become interested in investing in properties and/or settling down to start a family, the demand continues to rise astronomically. The big question is: Will the newly-built homes even be affordable for first time homebuyers? The answer will probably be negative. Once again, we are faced with the issue of overpriced housing. All we can do is hope that at least some sites will introduce less expensive homes for starter families or those who simply can’t pay a million dollars for a small lot.

Overall, it looks like another good year for the real estate marketplace. Despite the rough outlook for those of us who will find it difficult to compete with the ever-rising prices, the market will still see a ton of positive activity. Homes will be built, bought, and rented no matter the cost. That said, it will be very exciting to see how it all shakes out as we make our way into the unknown of a new year! 

Linda Hahn and Lorraine ThelenAbout Our Experts

Lorraine Thielen & Linda Hahn bring over 25 years of experience to help you buy or sell your home and make informed decisions in today's market. As realtors for RE/MAX TerraSol and specializing in the Orange County market, Thielen and Hahn offer a wealth of real estate knowledge to take the stress out of homebuying/selling. Visit their website for more information and to view current listings. 

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