While the nation’s economy adapts to the new normal, a few housing markets are poised for further growth and stability. Among these states is California, with the strongest real estate market in 2022 that is expected to improve in 2023.
California is ranking well in terms of income level, new construction rates and available homes, suggesting a healthy supply of houses compared to other states. However, if you are a real estate investor who wants to offer a good market outlook, it is crucial to pay close attention to emerging real estate market trends, such as median home prices, available homes for sale, mortgage rates, and the type of market.
Here are real estate market predictions and trends for 2023 that can offer valuable information and details about the market scenario for the next year, helping you make informed investment decisions.
1. Increase in Median Home Prices
All central areas’ median prices registered year-over-year increases. The Central Coast comes on top with a rise of 10.1%, followed by the Central Valley at 10.0% and 8.4% for Southern California. With the market expected to shift in the year’s second half, a mid-year C.A.R. forecast update indicates that the statewide median home price is expected to rise 9.7% to $863,390 in 2022, representing a solid gain from 2021 yearly median home price of $786,750.
2. Lack of Inventory in California’s Housing Supply
Due to a lack of inventory, California is still a seller’s market, and investment property prices have risen noticeably. The statewide unsold inventory index (U.I.I.) increased to its highest level in two years, at 2.5 months in June 2022, signaling a further improvement in California’s overall supply position. Increased supply and less competition contributed to the index’s improvement. The increase in total active listings in June was 64.4%, the highest year-over-year rise in the previous 89 months approximately.
3. Elevated Mortgage Rates
High inflationary pressures may elevate mortgage rates, decreasing buying power and housing affordability for potential buyers in 2023. According to the report, fixed mortgage interest rates advanced at 6.6% in 2023, up from 5.2% in 2022 and 3.0 % in 2021 but will remain relatively low by historical standards.
4. Increase In Rental Prices
A new report by Zumper states that 11 California cities ranked as the most expensive for renters out of 70 in the U.S. Despite renters seeing a decrease in rental prices in August, California’s long-term outlook doesn’t seem promising. According to the study, rental demand will remain strong due to growing homeownership costs and rent price growth will remain elevated until 2023.
5. Decline in Single-Family Home Sales
According to C.A.R.’s California Housing Market Forecast Report, sales for existing single family properties are forecast to reach 333,450 units in the next year. The anticipated decline is 7.2% from 2022’s projected sales volume of 359,220 units.
Is it a good time to purchase a property?
If you keep yourself updated with the real estate news, you might already know that the housing market nationwide has been cooling down lately. Mortgage rates and higher prices have reduced demand, while recent inventory gains have eased the supply.
Nevertheless, a 2023 housing market forecast published by the California Association of Realtors states that buyers can face less competition, more supply, and a favorable market environment in 2023. While the inventory situation continues to be constrained, more homes may come onto the market, meaning buyers across California have more options to choose from when buying a house. It is a significant change from 18 months ago, when inventory had bottomed out at record-low levels.
Since the supply levels are still running low from a historical standpoint, buyers in some markets may continue to face difficulties searching for suitable properties in 2023. But overall, the situation has improved significantly from a home buyer’s perspective. So, it could be easier to find and buy a house in California in 2023.
Reviewing all the above factors can help investors make a well-informed decision. If you are still uncertain about whether to purchase a property in California in 2023 considering the current rental market, consider approaching New Bridge Management. We are a property management company based in Turlock, CA with years of expertise in understanding California’s real estate market trends.
For more information, contact us at New Bridge Management.
