The housing market is morphing — what with interest rate hikes, rising prices and limited inventory — but economists expect to see modest gains nationwide in existing home sales in the New Year.
The same forces in play nationally most likely also will push home resale activity up next year here in the Santa Clarita Valley, which will end 2016 on a high note, according to statistics from the Southland Regional Association of Realtors.
With an increase in home sales posted locally for November, while many Southern California communities saw activity wane, the year is likely to end with annual home sales about 1.5 percent to 2 percent higher than in 2015.
The decline in affordability in many parts of the country is taking a toll on the public’s outlook about the housing market, especially along the populous, high-priced coasts, according to a housing forecast released last week by the National Association of Realtors.
Demand for homes and condos remains strong throughout Southern California, especially as employers hire more workers, but affordability issues and a scarcity of homes for sale present a major roadblock for prospective buyers.
At the end of November, there were a mere 486 homes and condominiums listed for sale in Santa Clarita. That was down 11.2 percent from a year ago and represented an abysmal 1.7-month supply at the current pace of sales.
“Rents and home prices outpacing incomes and scant supply in the affordable price ranges have stirred up a prominent headwind for many prospective buyers this year,” said Lawrence Yun, NAR’s chief economist. “Making matters worse, the unwelcoming reality of higher mortgage rates since the election is likely further holding back confidence. Younger households, renters, and those living in the costlier West region — where prices have soared in recent months — are the least optimistic about buying.”
Still, a majority of more than 2,700 households surveyed by NAR say now is a good time to buy a home, but consumer confidence has retreated significantly among renters. Fifty-seven percent of renters say now is a good time to buy, down from 68 percent a year ago. Meanwhile, 78 percent of homeowners say now is a good time to make a home purchase.
Existing-home sales are expected to close 2016 up 3.3 percent from 2015, making it the best year since 2006. Sales in 2017 are forecast to grow by about 2 percent and reach 5.52 million. Yun expected mortgage rates to jump to about 4.6 percent by the end of next year.
Condominium sales in Santa Clarita, while up 3.5 percent during November compared to a year ago, most likely will end the year down slightly compared to 2015. Even if December closes with a flurry of local condo sales, which is a typical pattern, the lack of condos in affordable price ranges most likely mean the condo annual sales total will match or fall slightly below year ago levels.
Dean Vincent is President of the Santa Clarita Valley Division of the 9,500-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.