SoCal not expected to share in rosy 2017 housing forecast
Homeownership rates will rise across the nation in 2017 after years of declines as more millennials enter the market, Zillow predicted Tuesday in its look-ahead report.
But, the Southern California market is not expected to see the same gains experienced in the rest of the country because of a lack of inventory and other factors, the home listing website said.
“It’s not as likely . . . and not as obvious in the SoCal area. I’m more hesitant to say you’ll see a tremendous increase in the homeownership rate,” said Svenja Gudell, Zillow’s chief economist. “You could see a small uptick, but it’s not a given.”
She said if more inventory comes on the market, there is a chance Southern California could see a bump in homeownership. But, Gudell said it also depends on job and income growth.
The national homeownership rate was 63.5 percent in the third quarter of 2016, said the U.S. Census’ Housing Vacancies and Homeownership estimate. At the same time in San Diego County, the rate was 54.4 percent.
Zillow’s report predicted national home values to rise 3.6 percent next year. In San Diego County values will rise 2.1 percent.
Gudell said mortgage rates will be a major factor in slowing value growth, and it is more extreme in San Diego County where home prices outpace much of the rest of the nation. The higher costs mean substantially more money based on interest rate changes.
Zillow’s rental prices for San Diego County are up 5 percent so far this year. The website predicts rents will rise 4 percent in 2017, again bucking the national trend of more substantial reductions.
“(Rental increases) will still be very strong,” Guldell said.
Other Zillow predictions for the nation’s housing market are likely as true in Southern California as they are the rest of the country.
The website predicted cities would focus on denser development close to public transit and urban centers. Many local groups have started doing this, like Community HousingWorks. The nonprofit opened North Santa Fe Apartments in March that is directly across from the Vista Transit Center.
Zillow also predicted the number of people who drive to work will increase because they are seeking affordable housing farther away.
It also warned buyers of new homes could pay more to cover the costs of rising construction wages if president-elect Donald Trump takes a firm stance against immigration.
Zillow reasoned it will be harder to get and keep workers if some are deported, and American skilled labor workers will have more options for employment in the vacuum, driving up wages.
“Construction is already in a tight spot . . . especially in Southern California with the high regulation cost,” Gudell said. “Prices are high and we’re already dealing with labor shortages. Skilled labor is hard to come by, in general.”
phillip.molnar@sduniontribune.com (619) 293-1891 Twitter: @phillipmolnar
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