• Home price appreciation is predicted to slow in markets with tight inventories
  • Less expensive, inland markets will account for a higher volume of sales
  • Housing affordability will drop to 27 percent in the state next year

In 2016, home sales volume in the Golden State will outpace 2015 totals by nearly 26,000 closings.

According to a California Association of Realtors housing forecast, 433,000 existing homes will sell next year, with overall activity rising by 6.3 percent year-over-year.

If the projections are accurate, 2016 is shaping up to be the best year for sales activity since 2012, when 439,800 homes sold.

“Demand in less expensive areas such as Solano County, the Central Valley, and Riverside/San Bernardino areas will remain strong thanks to solid job growth in warehousing, transportation, logistics and manufacturing in these areas,” said Chris Kutzkey, president of the association.

Jeffrey M. Frank / Shutterstock.com

Jeffrey M. Frank / Shutterstock.com

Solano County sits between San Francisco’s East Bay and Sacramento. Its largest cities are Vallejo, Fairfield and Vacaville.

In the Central Valley, sales activity should be highest in Bakersfield, Fresno and Modesto.

“In regions where inventory is tight, such as the San Francisco Bay Area, sales growth could be limited by stiff market competition and diminishing housing affordability,” Kutzkey added.

More sales activity shifting to inland regions will temper statewide median home price increases.

The forecast calls for a 3.2 percent increase in home prices next year, which would be the slowest rate of appreciation seen in the last five years.

This year, California’s median price will have grown by 6.5 percent year-over-year. In the previous three years, appreciation of 9.8 percent (2014), 27.5 percent (2013) and 11.6 percent (2012) occurred.

In 2016, the median home price is predicted to reach $491,300, which means affordability will remain an issue despite tempered appreciation.

In short, half of the homes considered affordable in 2011 and 2012 are no longer in that category, as the percentage of homes considered affordable will drop to 27 percent next year.

The association also expects fixed rates on 30-year mortgages to reach 4.5 percent.

Email Erik Pisor

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription