Happy New Year… Welcome to 2018
Time to dust off the old crystal ball and see what the future may hold for home prices in the South Bay-Beach Cities in 2018. If you are looking for major changes either up or down you could be disappointed. Home prices in 2017 continued their upward climb compared to home prices in 2016. Final figures will be available sometime next week but for now, prices rose the most in Manhattan Beach with a median home price that was almost $300,000 higher in 2017 than 2016. A number of very pricey home sales were a huge factor. Hermosa Beach, as well as North and South Redondo, saw prices move upward but not as much. El Segundo seems to have posted a small price decrease overall as prices remain very stable.
2018 home prices will probably continue going up at about the same pace as 2017. Features in the new tax law just passed by Congress are not likely to have a huge effect on home prices in the South Bay or California as a whole. While a tax write-off is one benefit of home ownership, it is not the only one.
In a market area like the Beach Cities buying a home can offer a number of benefits over renting even with our high real estate values. We don’t have much in the way of inventory for rentals or properties to purchase. In the Beach Cities, a number of older multi-unit apartments have been torn down and replaced with single family homes or small townhome projects. Smaller, older homes in all the Beach Cities have been replaced by larger and far more expensive single-family homes. Most of the Beach Cities don’t seem to care much about preservation. Redondo Beach does a better job of preservation than Manhattan or Hermosa. El Segundo, more so than the other Beach towns, appears to have a community that likes to update rather than tear down.
A hot topic that could have a major effect on housing is the lack of affordable homes and rentals throughout California. It is quite possible that the state will come out with ways to force cities to allow more affordable housing to be built. Unless there is a huge mass migration out of the state you can be pretty sure Sacramento will be going after City zoning laws that make it hard for new housing to be built. You can also be sure if they do, that no one will like the results.
I suspect that deregulation of the lending industry will be more problematic in the coming months. How quickly we forget that the housing boom and bust had its start with deregulation. If the administration moves forward with some of the plans they have outlined we could see a rehash of 2007 in a few years.
Of course, as with all projections using the magic crystal ball, I could be wrong about everything… We will just have to see what 2018 brings in the coming months!