The median home price in California will likely increase by 2.5% to $607,900 in 2020, slowing from a projected 4.1% annual gain in 2019 according to The California Association of Realtors. CAR went on to state that sales of existing single-family homes probably will gain 0.8% in 2020 to reach 393,500 units following a 3.1% drop in 2019 and down from 2018’s level.
At the same time, the average rate for a 30-year fixed mortgage will probably be around 3.7% in 2020 down from 3.9% in 2019 and 4.5% at the end of 2018, as noted by CAR. All of this means buyers will have more purchasing power than in years past.
Of course, the real story of California’s housing market is a persistent lack of supply something that may never be remedied, at least in the large metro areas. That means overall home prices and perhaps rent prices might persist high as well. This lack of supply and land on which to develop points to the internal migration if you will, away from areas like Los Angeles County, Orange County and San Diego County to the Inland Empire and notably The High Desert. Cities like Victorville, Hesperia, Apple Valley, and Oak Hills will offer home with more land and lower overall cost.
There is an upside in that we can expect some modest improvement in the inventory this year. This is largely due to the increase in active listings in all regions as homes are staying longer on the market. As C.A.R reported, the Unsold Inventory Index (UII), which measures the number of months it would take to sell the supply of homes on the market at the current sales rate, was 3.4 months in June 2019 up from 3.0 months in June 2018. This along with low-interest rates is good news for those thinking of buying a house in California in 2020 as there are more options to choose from.