California house prices, sales to climb in 2021, Realtors forecast

California house sales will rebound slightly next year from the
pandemic, and home prices will continue edging upward, thanks to
rock-bottom mortgage rates and strong homeownership demand,
�according to the state Realtors’ 2021 housing forecast.

But lingering economic uncertainty and a shortage of homes for
sale will keep 2021 price and sales gains in check.

Even with rising employment and rebounding gross domestic
product, the overall economy won’t be back to full strength by
2021, forecast numbers show.

“The uncertainty about the pandemic, sluggish economic growth,
a rise in foreclosures, and the volatility of the stock market are
all unknown factors that could keep prices in check and prevent the
statewide median price from rising too fast in the upcoming
year,†said California Association of Realtors Chief Economist
Leslie Appleton-Young.

Sales of existing single-family homes are forecast to increase
to 392,500 transactions in the state next year, up 3.3% from this
year’s projected total of 380,100.

If the 2020 projection is accurate, this year’s sales will
have declined for a third straight year, dropping 4.5%.

Next year’s forecasted sales still would be down 3.3% from
2019 levels.

Existing houses make up about two-thirds of all home sales.

Meanwhile, prices are expected to continue rising next year. The
median price of an existing house is forecast to hit $648,800, up
1.3% from 2020’s projected median of $640,300.

This year’s price is projected to rise 8.1% from 2019, due in
part to strong sales of higher-priced homes, which skews the median
upward, Appleton-Young said.

Prices have risen steadily since 2012, when the median for the
full year was $319,300.

The U.S. GDP will rise 4.2% in 2021 after a projected drop of 5%
this year, according to the forecast. Employment isn’t expected
to get back to pre-pandemic levels, with non-farm jobs rising just
0.5% in 2021. That would follow a projected loss of 12.7% this
year.

The 2021 jobless rate is forecast to dip to 9% next year, down
from a projected rate of 10.8% in 2020.

Financing also is expected to remain close to historic lows. The
2021 mortgage rate for 30-year fixed-rate loans will average 3.1%
in 2021, according to the forecast, compared with a projected
year-long average of 3.2% this year.

The 30-year mortgage averaged 2.87% last week and has been below
3% for the past 2 ½ months, according to Freddie Mac.

“An extremely favorable lending environment and a
strong interest in homeownership will continue to motivate
financially eligible buyers to enter the market,†said 2020 CAR
President Jeanne Radsick of Bakersfield. â€œWhile the economy is
expected to improve and interest rates will stay near historical
lows, housing supply constraints will continue to be an issue next
year and may put a cap on sales growth in 2021.â€

 

Source: FS – All – Real Estate News 1
California house prices, sales to climb in 2021, Realtors
forecast