CAR predicts California real estate market in 2016 will hit 27% on affordability index. Based on this number, it predicts that the housing market hasn't peaked out yet.
According to CAR, “The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, the global economic slowdown, financial market volatility, and the anticipation of higher interest rates are some of the challenges that may have an adverse impact on the market’s momentum next year. Additionally, as we see more sales shift to inland regions of the state, the change in mix of sales will keep increases in the statewide median price tempered.”
It is commonly accepted that the stock market is the indication of where the real estate market is heading. However, stock market is the prediction of the economy, it usually start reacting 6 months to year prior to the economic market, where housing market is the after reaction, which occurs 6 months to year after the economic changes. Therefore, based on the recent slow-down of the economic growth and stock market volatility, it is too early to predict housing market down turn based on this.
In the bay area, Job market continues to be stable and inventory remains low. The usual seller's market, like the mid-peninsula, silicon valley towns (Palo Alto, Sunnyvale, Cupertino, Fremont Mission San Jose area) where schools are great will remain strong and desirable. Other areas that are farther away from the silicon valley, like hayward, San Leandro, Daly City etc, has been performing well in the past 3 years with great returns for investors, and this year can consider cashing out.
