Zillow’s Q4 2019 Home Price Expectations Survey paints a less than rosy picture of California’s housing market. More than 100 US economists and real estate experts shared their predictions for home value growth in 2020, and six of the top 10 markets expected to under-perform are located in The Golden State.
If these predictions prove to be accurate, several of California’s priciest markets will be unable to sustain their sky-high valuations. San Francisco holds the title of most likely to under-perform, with 64 percent of panel experts in agreeance. San Jose was next on the list with 61 percent of panelists saying they expect the market to under-perform, followed by Los Angeles at 55 percent, Sacramento at 52 percent and Riverside at 47 percent.
“Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values in the most expensive of these,” said Skylar Olsen, Zillow’s director of economic research. “Indeed, this price correction — a clap back from having appreciated with too much exuberance in the recent past — pushes many previously hot markets to the bottom of our experts’ list.”
While some of these markets are expected to simply under-perform when compared to the national average (at a projected appreciation rate of 2.8 percent), a select few will see home values dip below their 2019 levels.
Fifty-seven percent of panelists believe home values will fall in San Francisco and 50 percent predict the same outcome for San Jose. Los Angeles fared slightly better at 38 percent, followed by 29 percent in San Diego and Riverside, and 24 percent in the capital, Sacramento.
All this is potentially good news for buyers seeking relief from rising home prices. With favorable mortgage rates and lower valuations, 2020 could be the right time to dip your toe into the market.