California’s real estate market made good progress in 2015, and according to recent data, is poised for further growth this year.
According to the 2016 Market Forecast from the California Association of REALTORS® (CAR), the state’s housing and real estate industries should anticipate continued gains in demand, along with higher home prices.
What are the driving forces behind this robust growth? The national economy, for one. Not to mention the California jobs market.
According to GDP data from the U.S. Department of Commerce, and collected by CAR, the U.S. economy has been growing steadily for the past 68 months, with a 2.6% projected gain for 2016.
As for jobs, the California unemployment rate was last reported at 5.3% for April 2016. That’s 0.1% lower than the 5.4% rate reported a month prior. Furthermore, the largest month-over-month jobs gains in April were in California, with an additional 59,000 nonfarm payroll jobs added, to be exact.
On a year-over-year basis, California again had the highest increase in nonfarm payroll employment in April, with 450,200 jobs added between April 2015 and April 2016.
With these improvements in employment, plus an overall healthy economic picture, it’s makes sense to predict strong housing growth for 2016. In addition, mortgage rates are staying close to historic lows, making it an attractive and fairly affordable time to secure a home loan.
What else can we expect for the housing market throughout the rest of 2016?
Since 2016 is almost halfway over, how are analysts feeling about the rest of the year? According to some experts, the biggest cause for concern could be the risk of mortgage rates gradually increasing. While rates are practically impossible to predict with certainty, CAR’s 2016 Market Forecast indicated that rates could begin to inch upward during the tail end of 2015 and continue to gradually increase throughout this year.
While the CAR market analysts weren’t completely wrong, we did see that rates remained fairly neutral, thanks in part to the Federal Reserve’s announcement in May that they would be delaying a rate increase.
Note that the key word here is delaying – not canceling. According to a May 12 Reuters article, the Fed is likely to hold off on a rate hike until September 2016. But again, there’s no guarantees and nothing’s set in stone.
“It is not that a June rate hike is off the table entirely, but again, we would need to see some fairly strong data between now and the June FOMC (Federal Open Market Committee) meeting,” said Sam Bullard, senior economist at Wells Fargo.
So what’s the bottom line?
California’s real estate market is going strong, and demand is high, making it a great time to sell. This means that, as a buyer, you’ll need to be prepared to make a solid offer right off the bat. Getting preapproved for a mortgage is recommended before starting your California home search, as this will put you in a better position when making an offer.
Finally, since mortgage rates are staying low (but could increase by the fall), this summer may be the most optimal time to get a loan.
If you’re ready to explore California mortgage options, don’t hesitate to contact us at (800) 564-4342 or simply APPLY NOW to get the ball rolling right away.