What can you expect in 2016?
The coastal markets of both the San Francisco Bay Area and Southern California have been seeing signs of slowing, and this is expected to continue into 2016. Although inventory is still tight, rising interest rates may deter many buyers. Until now, buyers frequently have had to pay over-asking price to score the winning offer. This works for cash buyers, but for those who plan to apply for a loan, rising rates will make paying over-asking more difficult.
There will be an increase in older first-time buyers. With the high California prices, many first time buyers aren’t able to purchase in their 20’s and are waiting until they are well established in their business and family life. In fact, millennials make up 34% of the overall home buying market (nationwide).
Millennials who already own homes will be moving up to larger homes and more seniors will be downsizing.
Zillow predicts that there will be an increase in suburban property purchases, but to date, the closer to a city center, the more desirable the property. Values have skyrocketed in the urban areas and only those who are forced to because of a tight budget, have headed to the suburbs. We will probably see a gradual shift to the suburbs but only because families can’t afford what they need if they buy in the city.
Predictions aren’t worth much except in hindsight though. Half will be right and half will be wrong. All we know for certain is that rents have gotten out of control and there doesn’t seem to be an end in sight. If you can buy, either in the city or the suburbs, it’s probably wise to do so.
And if all else fails, you can move to the south, the southeast in particular. You won’t have to shovel snow and you can still get a good deal, by California standards anyway.