Part Two: CAR’s 2016 predictions

Yesterday we started investigating CAR’s 2016 California Economic & Market Forecast, which takes a pretty in-depth look at what’s expected to come not only in the next 365 days, but what’s trending for the longer term. Today we’ll continue to look at that report, along with starting to present Paragon’s own year-in-review look at the year that has just concluded.


First, a look at where 2015 has left us, according to CAR:


  • The housing market has recovered, leaving us with a new normal:
    • Low mortgage rates
    • Positive job and income growth
    • Supply well below the long-run average
    • Low share of first-time buyers
    • Affordability a key concern for everyone
  • No one is experiencing an easy market or simple transactions.


Moreover, where is the inventory? A few factors and issues:


  • Repeat buyers are facing affordability challenges
  • Current mortgages feature low rates
  • There are low property taxes
  • Why list when there is nowhere a potential seller can afford to go?
  • Some could not qualify for a mortgage today
  • The foreclosure pipeline is dry
  • Investors are renting rather than flipping
  • New construction is recovering, but the inventory is still low
  • Pocket listings are not counted in listing statistics
  • Demographics issues: the trade-up buyer pool is smaller.


Paragon Real Estate has just released its 2015 San Francisco Real Estate Market Review, which we’ll start to look at in further detail tomorrow in conjunction with continuing to explore CAR’s predictions for 2016. Paragon’s report is billed as “Architecture, views, probates, penthouses, lofts, TICs, luxury homes, seasonality, mortgage rates, sales prices, dollar per square foot values, and everything else we could think of in a look back on 2015” – definitely something to anticipate!



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