After six years of rising home prices, what does this year have in store? Will prices continue to rise or will the market stall? Will rent hikes keep coming? According to Jeff Collins with the OC Register who interviewed 10 economists, the following are forecasts for 2018.
Home prices are still rising. Home prices in Southern California are expected to continue to rise another 4.2 percent this year, same as the average for California as a whole. Orange County prices specifically are expected to rise 5 to 6 percent.
Sales are flattening out. 2018 sales will likely rise only 1 percent in California this year and 2.7 percent in Orange County. Overall sales have plateaued across the state and the country.
Mortgage rates will increase. Averaging out around 3.8 percent for the past three years, rates have been considerably low. Now economists say rates are heading up again and will likely stay above 4 percent this year. Interest rates for the benchmark 30-year mortgage are expected to be between 4.3 and 4.6 percent.
Fewer homes to choose from. With less inventory and fewer sales buyers will have fewer homes to choose from. In fact, 2018 started with the lowest for-sale inventory in Southern California in five years. With just 27,550 homes for sale in SoCal at the start of this year, there are not a lot of options for prospective buyers which, in turn, will continue to push up sales prices.
Renters will pay more. Orange County rents are expected to rise 3 to 3.6 percent this year as low vacancy rates will keep rents high. Around 5 percent is when you'll typically see this slow down, but with many new developments filling up, don't expect this to halt anytime soon.
It is still a good time to buy. Economists believe this bull market to still have some legs. We don't expect to see prices stalling or going down anytime soon. Thus, if you're considering buying a home, it's still a good time to buy. In fact, with rates as low as they are, now is the time to buy. Over the course of this year, rates and prices are expected to rise, so buying now is the best move you can make if you're ready.