What's 2019 Look Like?
What Does 2019 Look Like?
Well, I am not an oracle but here’s my opinion.
In Santa Cruz County, there just aren’t enough homes listed for sale to meet the demand from buyers. Our county, the second smallest in the state, transitions only about 180-250 homes a month. Yet we have pre retirees buying now for later use, Millenials forming households, refugees from Silicon Valley seeking a more serene lifestyle here in Santa Cruz and overheated Central Valley folks seeking the coastal breezes. This is putting upward pressure on prices, and it’s partly why house values have risen so much over the last couple of years.
According to economists and housing analysts, a “balanced” and healthy real estate market has somewhere between five and six months of supply. This means it would take five to six months to sell off all properties currently listed for sale, if no new ones came onto the market in the meantime — theoretically speaking. We have seen over the hill a remarkable less than one month inventory in the past, and here in Santa Cruz less than a 3 month supply this year. Hopefully we continue to see more inventory coming, as we are experiencing right now, but there is still woefully few homes to choose from.
As of spring 2018, most cities across the U.S. had less than a five-month supply of homes for sale. Some cities are well below that level. Some of the tightest markets — like Seattle, Sacramento, Santa Clara, San Mateo and Denver — had less than a two-monthly supply of homes for sale, as of April 2018.
This is partly why the latest U.S. home-price forecasts, extending into 2019, are calling for additional gains over the coming months. Short supply and steady demand are putting upward pressure on home prices, and these conditions could carry over into 2019 for many U.S. cities.
Still, it’s good to see some home-price forecasts calling for somewhat normal growth over the next year. House prices need to cool down a bit, for the sake of long-term sustainability and affordability.