C.A.R. releases its 2022 California Housing Market Forecast California
LOS ANGELES (Oct. 7) -Housing market to remain solid if pandemic is kept under control, but structural challenges will persist.
Existing, single-family home sales are forecast to total 416,800 units in 2022, a decline of 5.2 percent from 2021’s projected pace of 439,800.
California’s median home price is forecast to rise 5.2 percent to $834,400 in 2022, following a projected 20.3 percent increase to $793,100 in 2021.
Housing affordability is expected to drop to 23 percent next year from a projected 26 percent in 2021.
Supply constraints and higher home prices will bring California home sales down slightly in 2022, but transactions will still post their second highest level in the past five years, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The baseline scenario of C.A.R.’s “2022 California Housing Market Forecast” sees a decline in existing single-family home sales of 5.2 percent next year to reach 416,800 units, down from the projected 2021 sales figure of 439,800. The 2021 figure is 6.8 percent higher compared with the pace of 411,900 homes sold in 2020. The California median home price is forecast to rise 5.2 percent to $834,400 in 2022, following a projected 20.3 percent increase to $793,100 in 2021 from $659,400 in 2020. An imbalance in demand and supply will continue to put upward pressure on prices, but higher interest rates and partial normalization of the mix of sales will likely curb median price growth. Additionally, a shift in housing demand to more affordable areas, as the trend of remote working continues, will also keep prices in check and prevent the statewide median price from rising too fast in 2022. “A slight decline next year from the torrid sales pace of the past year-and-a-half will be a welcome relief to potential homebuyers who have been pushed out of the market due to high market competition and an extremely low level of homes available for sale,” said C.A.R. President Dave Walsh. “Homeownership aspirations remain strong and motivated buyers will have more inventory to choose from. They will also benefit from a favorable lending environment, with the average 30-year fixed rate mortgage remaining below 3.5 percent for most of next year.” C.A.R.’s 2022 forecast projects growth in the U.S. gross domestic product of 4.1 percent in 2022, after a projected gain of 6.0 percent in 2021. With California’s 2022 nonfarm job growth rate at 4.6 percent, up from a projected increase of 2.0 percent in 2021, the state’s unemployment rate will decrease to 5.8 percent in 2022 from 2021’s projected rate of 7.8 percent. Growing global economic concerns will keep the average for 30-year, fixed mortgage interest rates low at 3.5 percent in 2022, up from 3.0 percent in 2021 and from 3.1 percent in 2020 but will still remain low by historical standards. “Assuming the pandemic situation can be kept under control next year, the cyclical effects from the latest economic downturn will wane, and a strong recovery will follow,” said C.A.R. Vice President and Chief Economist Jordan Levine. “However, structural challenges will reassert themselves as the normalization of the market continues. Demand for homes will continue to outstrip available supply as the economy improves, resulting in higher home prices and slightly lower sales in 2022,” Levine continued.
SB 9 Explained
California has a severe shortage of middle-income housing, or small (fewer than 10 homes) multi-family housing developments near jobs and transit; the lack of such housing is driving the displacement and severe rent burden of Californians across the state. The problem: it is illegal to build middle-income housing in over 70 percent of the state.
SB 9 would legalize this middle-income housing by adopting best practices from housing experts at the University of California Los Angeles. It will also help California respond to historic job loss in the construction sector and a 45-percent decrease in home construction due to COVID-19. SB 9 makes two important changes to state law: It allows homeowners in most areas around the state to divide their property into two lots, thereby increasing opportunities for homeownership in their neighborhood; and It allows two homes to be built on each of those lots, with the effect of legalizing fourplexes in areas that previously only allowed one home.
SB 9 contains important protections against the displacement of existing tenants. SB 9 is a part of the Senate’s Building Opportunities for All housing package.
Learn more about this package of legislation here. Updates: 9/16/2021: SB 9 was signed by Governor Newsom and chaptered by the Secretary of State. This bill will go into effect on January 1, 2022. Resources: Implementation explainer Bill text Fact sheet One-page explainer Authors: Atkins (D, SD 39), Caballero (D, SD 12), Rubio (D, SD 22), and Wiener (D, SD 11) Co-authors: Gonzalez (D, SD 33), McGuire (D, SD 2), Robert Rivas (D, AD 30)
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