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2022 Real Estate Market Forecast for California Part 1

California Economic & Housing Market Forecast. As agents we need to have a lot of data and do a lot of research prior to giving any information or a forecast of any sort. We need to have credible, reputable information prior to sharing it.

This information comes directly from the California Association of Realtors abbreviated that’s CAR. More homes were sold in 2021 than homes have been sold per year in the last 7 years, we’re predicting to end the year selling somewhere between 440,000 Single Family Homes (SFH) Prices went up over 11% in 2020 and the forecast was that values and prices would only increase by 6.8% but actual increase was 20.3% this year.

CAR feels that home prices are going to continue to rise. Here are some of the factors that have led them to this conclusion. If you look at this graph it shows listings active on the market by month, you can see that we are still depressed w/ inventory in a quote unquote normal market, and the lack of inventory and low interest rates should help maintain a healthy forecast for 2022. Lack of inventory should continue to keep prices increasing. Here are the reasons why lack of inventory is not changing anytime soon. In the last 34 years we’ve grown from a 27 million person state to a 40 million person state and we build about two and a half times less homes per year than we did in the 1980’s.

So we’ve grown by 13 million people and were building two and a half times less homes. Lack of supply with increase in demand causes prices to increase, not decrease. California’s dubious record on housing supply and affordability: The state tells us how many homes we need to build in terms of housing affordability, and we’ve only hit that number 5 times in the last 34 years. Although we have about a 20% increase in housing permits projected this year, which you would assume is good, but this still leaves us about halfway of where we need to be. Also homeowners are staying in their homes longer than ever before averaging 11 years, which is not helping with the inventory levels. So the housing market forecast for 2022 according to the California Association of Realtors looks good.

Stay tuned for part 2 of the California Association of Realtors forecast on the Real Estate market for 2022.