As we close out 2015 and look ahead to 2016 we see a healthy, appreciating real estate market. House sales prices have increased about 6% in California and almost 12% in Nevada County. Add to this that existing home sales have increased in 2015 in California by about 7% and in Nevada County by a whopping 16%…16% more homes were sold in 2015 compared to 2014.
The low inventory of homes for sale has brought the issue of Home Affordability to the forefront. The lack of supply coupled with a higher demand has pushed both sale prices and rental rates upward. The higher the prices and rates go the more they push consumers out of the market or delay their entry.
We have seen a decrease of home affordability in the California since the first quarter of 2012. It has been a steady decline. 2015 finished with a dismal 29% of households being able to buy a median-priced home in California compared to a nationwide 56% of households being able to buy. California is the higher-priced spread.
In the third quarter of 2015 only 10% of households were able to afford to purchase in San Francisco, 13% in San Mateo, and 19% in Santa Clara counties. This compares to 45% of households in California being able to afford Nevada County prices. Of all the California counties only Kings County beats the U.S. percentage of affordability.
Lack of supply and heightened demand for housing has raised the sales prices and rental rates. It is market theory at work. Increasing supply is the solution but it won’t be easy or fast.