In 2017 we saw the lowest inventory levels in five years across Southern California, which served to push prices to close to, and occasionally beyond, their all-time highs. Most notably locally was the flurry of activity at price points below $750,000. We saw gains of 10-12% in home values, year over year. Headed into 2018, this demographic still shows exceptionally tight inventory, with roughly three weeks of supply currently on the market. This is 15% lower than we started in 2017.
The continuing shortage of available housing, combined with relatively full-employment locally would indicate another strong year ahead for prices with all things being equal. However, all things are not equal. The most recent tax bill, has tempered what used to be a clear cut advantage between renting and owning. The new tax plan least affects homes in the below $750,000 price range, and that is where inventory is tightest locally. If employment remains strong, we can also anticipate that rents will continue to push up powerfully.
People who have been in their homes since 2013, have seen 37% appreciation to date, while people who have been renting, are feeling that same increase in their monthly rent. This inflationary trend will continue as long as we continue to have a strong employment base locally, and remain attractive to employers in the future. If you have questions about the local real estate market, and how to best take advantage of these current conditions, please give us a call today.