As we head into 2017, many fix and flip investors are wondering what to expect with the California real estate market. It recent years, the state has performed well from a house flipping investment stand point with house prices and sales continuing to rise. The biggest issue investors have faced is the lack of inventory on the market as increasingly first-time home buyers purchased available properties. In 2017, we expect a few of these trends to continue as well as a few new trends to develop. Here’s what we think you can expect:
List Prices Will Remain Stable
Right now, the median list price is $469,000 in California per RealtyTrac. This is the same median price as October 2015, which shows list prices are not going up or down. Therefore, investors have some predictability when looking for properties and can plan accordingly.
Median Sales Price Has Increased
Compared to October 2015, sales prices have gone up by 1%. Now, that may not seem like a lot, but it marks an average increase of $3,000.00. Right now, the median sales price for homes in California is $418,000. If home sale prices continue to hold steady, investors stand to profit. Zillow predicts that we’ll see a growth of 3.6% this year when it comes to home sales prices.
Home Sales Have Slowed, But Will Pick Up Pace
RealtyTrac reports that in October of 2016, home sales were down about 30%. However, when you compare October 2016 to October 2015, home sales had a substantial increase of 1036%. That’s quite tremendous and shows how much the market has recovered. In 2017, we expect that home sales will pick up. Right now, there are many millennial buyers looking for their first homes and they are ready to make purchases. Keep in mind, in 2016, 50% of home buyers were millennials.
Rent Prices May Hold Steady, Not Increase
There are numerous factors at play when it comes to rent prices, such as demand. In the past few years, we saw rent prices surge across the country, but that trend may not hold true on 2017. Particularly in the state of California. According to Zillow’s chief economist, Dr. Svenja Gudell, “Renters should have an easier time in 2017. Income growth and slowing rent appreciation will combine to make renting more affordable than it has been for the past two years.” So, what does this mean for buy and hold investors? Quite simply that rent prices will remain high, but not grow this year.
Home Values Will Increase
In 2016, it was reported that home values across the country rose by 4.6%. This was welcome news to home owners. Economists say that in 2017, we can expect home values to increase by an additional 3.7% in 2017. Properties will be more valuable than they have been in quite some time, which is beneficial to both home owners and investors.
Have questions about 2017 real estate and how you can leverage current trends to your advantage as a house flipping investor? Give ZINC a call at 559.326.2509 and speak with an expert from our team!