Key highlights from this report:
- CoreLogic recently published a list of “Top Housing Markets of 2019.”
- They predicted that home prices nationwide would rise by 4.8% this year.
- Some housing markets could see bigger gains, into the double digits.
- Ten metros in California were predicted to be top performers in 2019.
- Chico, Salinas and Santa Barbara topped the list with strong forecasts.
In April, the real estate analytics and data company CoreLogic published an updated housing forecast with home-price expectations for 2019. Among other things, this report contained predictions about which metro areas would see the biggest home-price gains in 2019.
Interestingly, the top ten real estate markets that are expected to be top performers are all located within California. Cities like Chico, Sacramento and Santa Barbara are currently experiencing above-average home price gains, as well as strong predictions.
Strong Forecasts for Some Housing Markets
Nationally speaking, home prices in the U.S. have slowed down over the past year or so. But there are still some local real estate markets that could record big price gains for 2019. And many of them are located within California.
In April, CoreLogic’s research team wrote:
“After several years of continuous projected year-over-year increases in nationwide residential real estate appreciation, our CoreLogic team predicts that for 2019, home prices will appreciate by 4.8 percent nationwide, with the highest appreciation in the states of New York, California, Nevada, Maine, Hawaii and Oregon.”
They also drilled down to the city and metro level, to determine which local housing markets would likely experience the biggest home-price gains in 2019. According to the authors, the cities with the strongest forecasts have a few things in common, including a wide array of amenities for residents and good career opportunities.
Real estate markets with these and other positive attributes “will likely continue to perform well over the next few years,” the report stated.
Big Gains Predicted for Chico, Bakersfield, Santa Barbara, etc.
The company made home-price predictions for metro areas across the country and singled out 10 they expect to perform particularly well this year.
According to the report, the 10 housing markets below are “forecasted to appreciate over 10 percent year-over-year at the end of this year [2019], and all of these metros are in California:”
- Chico
- Salinas
- Santa Maria-Santa Barbara
- Modesto
- Bakersfield
- Oxnard-Thousand Oaks-Ventura
- Sacramento-Roseville-Arden Arcade
- Vallejo-Fairfield
- San Francisco-Redwood City-South San Francisco
- San Louis Obispo-Paso Robles-Arroyo Grande
Zillow is also reporting big price gains for some of these California housing markets, using their own proprietary “House Value Index.” In May 2019, for example, they wrote: “Chico [California] home values have gone up 13.6% over the past year and Zillow predicts they will rise 8.4% within the next year.”
Common Thread: Low Supply and High Demand
So what’s going on in California? Why do housing markets like Sacramento, San Francisco and Bakersfield keep popping up in these types of forecasts?
As we noted in a previous report, inventory has a lot to do with it. Or rather a lack of inventory.
A “balanced” real estate market (one that doesn’t lean too far in favor of buyers or sellers) has a 5- to 6-month supply of homes for sale, according to economists. But as of March 2019, all of the cities / metro areas in the list above had less than a 4-month supply. Some had about a 2-month supply in March.
Sacramento a ‘Refuge’ for Buyers Priced Out of Other Markets
In Sacramento, the inventory situation is even tighter. The California state capital had about a 1.5-month supply of homes for sale in March of 2019 (note the decimal there). Home buyers planning to enter that market will need to be patient and persistent.
The Sacramento housing market stands out in another area as well. The “median days on market” for that city was also among the lowest in California (and the nation). This means homes are selling fast in the Sacramento area — much faster than the statewide or national average.
“The commonalities in many of these [areas] are a high quality of life, coastal locations and strong job opportunities,” the CoreLogic report stated. But Sacramento is a different story. It’s an inland city, not coastal. And it’s currently receiving a lot of transplants from elsewhere in the state.
According to a May 2019 news release from the real estate brokerage Redfin, Sacramento had the nation’s second-highest “net inflow” during the first quarter of 2019. In this context, a net inflow means that more people are looking to move into an area than leave it. Of those people who were looking to move into the Sacramento area, the top “origin” point was the San Francisco Bay Area.
In other words, there is an exodus of people moving from the Bay Area to Sacramento. And that is putting upward pressure on home prices in the capital city.
Disclaimer: This article contains housing market forecasts issued by third parties not associated with the Home Buying Institute. We have reported them here as an educational service to our readers. Real estate predictions are the equivalent of an educated guess and should be treated as such.