2019 Rental Market Price Forecast For Southern CA
As we creep into the second quarter of 2019, many home buyers are wondering what to expect from the southern California real estate market and if buying or selling a home this year is in their best interest.
If you’ve been in the southern California real estate industry for a while, you remember the mess that was 2007. Home prices were dropping, sales were slow, and it felt like foreclosures were everywhere. After six years of this, real estate professionals, home buyers, and sellers finally got a break. In 2013, things started turning around, and home prices jumped up about 23%, giving the real estate industry a breath of fresh air.
Since then, Southern California real estate has transformed, buyers started bidding wars again, sellers have been handling multiple offers, sometimes just days after listing. 2018 started strong, but as home values decreased towards the end of the year, questions were raised about what to expect in 2019.
Rising Mortgage Rates Affect Rental Home Prices
While lower mortgage rates helped give the real estate market a boost, it looks like 2019 will be the year they start climbing again. Reports predict that mortgages rates will be between 5.2 and 5.5%, slightly higher than the 2018 average of 4.5%. What does this mean for the rental market? Property owners sometimes feel pressure to pass the mortgage rate increases down into their rental prices, so some tenants could expect to pay more per month than in years past.
Lower Home Prices
California buyers have been waiting for home prices to come down a little bit, and 2019 may be the year that it happens. While this could mean that more people will able to afford to buy, it also means that competition for homes will increase.
Fewer Homes To Pick From Affect Rental Property Prices
The shortage of homes and new developments in California is another reason real estate professionals predict that 2019 is the year of the landlord. Without a lot of options to buy, people may opt to rent out a home until trends in the real estate market start to shift in their favor. More renters are choosing to stay put and continue paying their rent instead of facing fierce competition in the housing market, which is good news for landlords.
All of these predictions lead real estate professionals to believe that 2019 will be a profitable year for landlords. These factors make it less appealing for individuals to buy homes and make renting seem like a better option. In 2018, there were more people renting homes in the United States than there were people buying homes. This was due to many factors, including high home prices, rising interest rates, and low home availability.
Five California cities make the list of cities with the highest rent, which means landlords in these areas have a good chance of charging top dollar for rent each month and finding tenants to pay it. These cities are:
- San Fran- $3448/month
- San Mateo- $3064/month
- Sunnyvale- $2764/month
- Santa Clara- $2718/month
- San Jose- $2627/month
Good News For Landlords: High Prices and Low Availability
The current status of the real estate market is good for two groups of people: sellers and landlords. Quick-thinking buyers with a lot of cash have a good chance at closing the deal on their dream home, but first time buyers, seniors, and millennials may choose to sit back and wait for some changes. In the meantime, they’ll be looking for rental homes.
New Construction On The Rise
Home buyers are in love with the idea of building a custom home, and new developments that specialize in apartments and single-family homes are expected to rise quickly. As families and individuals wait for their custom home to be built, they’ll need a place to stay, and many will choose to rent a house for the duration of the new build process.
Another thing renters will be looking for in 2019 are competent and professional management companies to simplify the renting process. Landlords will be hiring reputable management companies in the area (such as Murrieta Property management companies or Temecula property management companies) to help screen tenants, handle the move in/out process, perform maintenance, stay current on legal issues, and assist with day-to-day communication with tenants. A new wave of property management software is expected to debut in 2019, making it easier for property managers to serve both the landlords and the tenants effectively.
The real estate market is fluid, always shifting and changing with the economy. While nobody can be sure what property investors can expect in 2019, the forecast looks like this year could be a profitable year for landlords.
Benefit National is a Property Management company managing homes in the Murrieta/Temecula area.