Home sales in 2019 should remain strong

After a noticeable shift in sales last summer, reports of a slowdown in housing have many buyers and sellers wondering what lies ahead.

Although price appreciation and number of sales have pulled back from recent highs, the truth is they remain strong.

Over the past five years, home prices have risen an average of 5 percent to 7 percent annually due to low supply and high demand for property in SoCal. The forecast by the California Association of Realtors predicts annual appreciation this year closer to 3 percent, not as good as before, but certainly not bad.

No one sees a collapse in sight, mainly due to fundamental factors still in play in the housing market.

Inventory is starting to creep up as buyers shifted from bidding war to bargain hunter mode, especially in higher end markets over 1 million. Some buyers are sitting on the fence, cautious of overpaying for property that they worry may decline in value.

I expect we will see demand resume when spring rolls around, and although inventory is increasing just a bit, there is no reason to believe levels will affect prices. We have become a nation of homebodies, with over half of existing homes owned by baby boomers and the silent generation who see no incentive to move from their low mortgages and property tax advantages.

Couple that with lack of land for new construction and you have supply side restrictions that will most likely continue into the future, until more boomers age out of homeownership.

Demand for housing should be fueled by positive job growth, wage increases and a large millennial population entering prime home buying years. California’s unemployment rate of 4.1 percent is the lowest in more than 40 years, and our diverse economy should be able to weather any storms blowing from Washington politics.

Mortgage rates have softened from a high of 5 percent in mid 2018 to a comfortable 4.5 percent, opening another opportunity to lock in historically low financing costs. Credit standards remain moderate to tight, making sure homebuyers understand and can afford the costs of a purchase.

Buyers who may think it is not a good time to buy should realize that the expected slow and steady rise in SoCal housing prices and mortgage rates are not going to make things any easier in the future.

Adriana Donofrio • deasypennerpodley Glendora (626) 926-9700 adonofrio@dppre.com