Look for these key things in the market over the next 3-5 years:
a. Total volume in sales to increase dramatically
b. Price appreciation to be closer to 3-5%: closer to the inflation rate. Although the signs of an improving economy will be dampened by an increase in interest rates, demographic shifts are bringing strong demand to the area. Select, prime locations should see a much higher appreciation rate.
c. As the market stabilizes, the average days on market should trend back to its historical norm which would be 4-6 months for the South Bay area.
d. Supply will remain tighter in the more affordable ranges, making it important for buyers to be pre-approved with finances in order ready for strong offers in order to compete. Boomers are not moving as often as in previous years and generally, those are the homes most sought after by young families, thereby keeping inventory low and that built up demand urging pricing.
e. While 62% of homes in California saw multiple offers in 2016, the number of offers a home is expected to receive is likely to decrease as the market settles into “the new normal”. Homes closer to the average affordability index should still see multiple offers as this is the largest gap in available inventory and where the pent up demand will most readily show itself. Homes priced right, in excellent showing condition and in top rated school districts are still expected to see a great buyer response.