Home prices in California will continue to increase next year, but at a slower pace, according to a forecast released by the California Association of Realtors.

The median price of a home is expected to rise 4.2 percent in 2018 to $561,000, less than the expected 7.2 percent increase this year.

While the forecast from the Realtor group did not include specific San Diego County estimates, researchers said the figures should be similar to the state total because Southern California represents the state’s biggest housing market.

Leslie Appleton-Young, chief economist for the organization, said a lack of homes for sale — because of construction not keeping pace and other factors — would keep home prices rising for the next three to five years.

But, she said affordability constraints will stop the increases from rising higher because of the gap between income increases and home prices.

“The slower income growth is really hampering the ability of first-time buyers to get into the market,” Appleton-Young said in a presentation at the Marriott Marquis San Diego Marina as part of the annual CAR Expo.

Appleton-Young said sales of homes have stayed at about the same level for years — which doesn’t make a ton of sense if you consider substantial job growth and historically low mortgage interest rates. But, fewer homes and increasing prices have stopped sales from picking up.

Sales are predicted to increase by 1 percent in 2018, down from the expected 1.3 percent increase this year, she said.

In the next few years, California’s population will grow — up to an estimated 40 million people in 2018 from 39.4 million in 2016 — and so the need for more housing will increase, too.

International buyers are expected to continue to be interested in California in the coming years, officials at the Realtor organization said, because prices here are still cheaper compared to other places around the world. Although, there will likely continue to be a reduction in Chinese buyers as that nation’s government cracks down on how much money leaves the mainland.

Another prediction for next year is that less expensive areas will see increased demand from many buyers who are priced out of other in-demand locations.

Agents in Ramona for example, said they have already seen an increase of people from central San Diego who are searching for cheaper housing.

Source: latimes.com by Phillip Molnar