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Is the West Coast about to finally witness a slowdown?

It’s about time

San Francisco

After three years, the region infamous for its outrageous housing markets might finally slow down this year.

Homebuyers in Western metros have long struggled to secure homes due to a shortage of inventory and rising home prices amid strong demand

“The rapidly accelerating gains prominent in many of the Western metros are projected to level-off entirely in Q2 2016, which will be the first time the region has seen quarterly performance this low since January 2012.” Clear Capital’s latest HDI market report found.

Western metros consistently topped the list of the 20 hottest housing markets from realtor.com each month last year, with San Francisco and Denver tossing around the No.1 spot a lot.

“The West, which has largely outpaced the rest of the nation in terms of growth in the last several years, is beginning to see market slowing across some of its major metropolitan statistical areas,” the report said.

The Clear Capital report said that Western markets began to slow in the latter half of 2015, with San Francisco, Los Angeles, and San Diego currently seeing QoQ growth rates under 1%.

Meanwhile, other cities like San Jose and Denver are hovering slightly higher at around 1.3% and 1.5% QoQ, respectively, the report said.  

If Clear Capital is right in its annualized predictions, these current levels would project to roughly half of the performance seen in 2015.

“While slower growth is typical during the winter real estate off-season, it remains to be seen how or if the markets will adjust once the typical market rush of spring begins,” the report said.

This chart shows how the West Coast compares to the other regions.

Click to enlarge

chart january

(Source: Clear Capital)

The California Association of Realtors posted similar findings back in October, adding that while the housing market is expected to improve in 2016, a shortage of available inventory and continuing high costs are expected to limit the improvement. 

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