Markets & Economy

‘The new normal’ according to C.A.R.’s chief economist

Tight inventory and skyrocketing prices will slow sales in 2017
  • For 2017, C.A.R is predicting a 1.4 percent increase in existing-home sales and 4.3 percent increase in median home sales prices.
  • Overall inventory is at a 3.4 month supply, and it's tightest in the San Francisco Bay Area, which has a 2.4 month supply.
  • Boomers staying still, tightening inventory, lack of construction, rising unaffordability and economic and global unrest are expected to keep sales activity low in 2017.

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Leslie Appleton-Young "This is the new normal," said California Association of Realtors vice president and chief economist Leslie Appleton-Young as she presented the association's 2017 housing market forecast today. According to the forecast, 2016 existing-home sales were strong at the beginning of the year but quickly slowed due to tight inventory and skyrocketing median existing-home sales prices, which blew past the last cyclical price peaks by as many as 38.9 percentage points in some regions. For 2017, C.A.R is expecting for the 2016 trend to continue with a nominal 1.4 percentage point increase in existing-home sales to 413,000 and a 4.3 percentage point increase in median home sales prices to $525,600. The average mortgage rate for 30-year fixed mortgages is expected to rise, but it will still be in line with the historically low rates seen over the past year. Lastly, the state's unemployment rate is expected to dip to 5.3 percent due to strong job growth. ...