CA real estate market forecast

California and Tahoe Market Forecast

The following article is provided by the California Association of Realtors from their fall business meetings. Images are screen shots our team personally took when we attended the economic market forecast luncheon that went into detail on the California real estate market forecast.

For local Tahoe real estate market data, click on the following link: Lake Tahoe Real Estate Market

C.A.R. releases its 2023 California Housing Market Forecast
Market shift under way as mild recession and higher interest rates cut into housing demand.

  • Existing, single-family home sales are forecast to total 333,450 units in 2023, a decline of 7.2 percent from 2022’s projected pace of 359,220.
  • California’s median home price is forecast to decline 8.8 percent to $758,600 in 2023, following a projected 5.7 percent increase to $831,460 in 2022.
  • Housing affordability* is expected to drop to 18 percent next year from a projected 19 percent in 2022.

LOS ANGELES (Oct. 12) – A modest recession caused by an ongoing battle against inflation will keep interest rates elevated to suppress buyer demand and contribute to a weaker housing market in 2023, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

The baseline scenario of C.A.R.’s “2023 California Housing Market Forecast” sees a decline in existing single-family home sales of 7.2 percent next year to reach 333,450 units, down from the projected 2022 sales figure of 359,220. The 2022 figure is 19.2 percent lower compared with the pace of 444,520 homes sold in 2021.

Sales of Single Family homes in CA

The California median home price is forecast to retreat 8.8 percent to $758,600 in 2023, following a projected 5.7 percent increase to $831,460 in 2022 from $786,700 in 2021. A less competitive housing market for homebuyers and a normalization in the mix of home sales will curb median price growth next year.

Median Price of Single Family Homes in CA

“With the market shifting as home sales and prices are predicted to temper next year, buyers and sellers are adapting to the new realities of the market,” said C.A.R. President Otto Catrina, a Bay Area real estate broker and REALTOR®. “As sellers adjust their expectations, well-priced homes are still selling quickly. And for buyers: more homes for sale, less competition, and fewer homes selling above asking price, all point to a more favorable market environment for those who were outbid or sat out during the past two years when the market was fiercely competitive.”

C.A.R.’s 2023 forecast projects a dip in the U.S. gross domestic product of 0.5 percent in 2023, after a projected uptick of 0.9 percent in 2022. With California’s 2023 nonfarm job growth rate at 1.0 percent, up from a projected increase of 4.9 percent in 2022, the state’s unemployment rate will edge up to 4.7 percent in 2023 from 2022’s projected rate of 4.4 percent.

Stubbornly high inflation and growing economic concerns will keep the average for 30-year, fixed mortgage interest rates elevated at 6.6 percent in 2023, up from 5.2 percent in 2022 and from 3.0 percent in 2021 but will remain relatively low by historical standards.

CA real estate market forecast
Interest Rate historical data for CA

“As the housing market continues to cool, the U.S. economy will moderate further and is expected to slip into a mild recession in the first half of next year,” said C.A.R. Vice President and Chief Economist Jordan Levine. “High inflationary pressures will keep mortgage rates elevated, which will reduce buying power and depress housing affordability for prospective buyers in the upcoming year. As such, housing demand and home prices will soften throughout 2023,” Levine continued.


SFH Resales(000s)417.7424.9402.6398411.9444.5359.2333.4
% Change2.0%1.7%-5.2%-1.2%3.5%7.9%-19.2%-7.2%
Median Price($000s)$502.3$537.9$569.5$592.4$659.4$786.7$831.5$758.6
% Change5.4%7.1%5.9%4.0%11.3%19.3%5.7%-8.8%
30-Yr FRM3.6%4.0%4.5%3.9%3.1%3.0%5.2%6.6%

p = projected
f = forecast

* = % of households who can afford median-priced home

Leading the way …® in real estate news and information for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® ( is one of the largest state trade organizations in the United States, with more than 217,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Additionally, not mentioned in the official article is that investor purchases are up big time!

CA real estate market investor buyers
Investors are back!

As soon as the rental eviction moratoriums started to go away, the investors quickly came back into the purchase market through the state and in Tahoe. These investors are mostly using 1031 exchange money to purchase, so the higher interest rates don’t affect them as much as a normal buyer. And will rental income still very high these investors are seeing dollar signs with prices dropping a little.

Housing is still very tight in CA, with a massive gap in available vs. needed housing over the past 20 years and very little new building that isn’t keeping up with the increase in population. Even in Tahoe we have seen very high rental rates for not only vacation rentals but also longer term monthly and seasonal rentals. With limited new construction in the Tahoe Basin, the high rental rates will continue for at least a few more years.

birch tahoe cabin
Click image to view property details.

An example of a good long term rental is 3745 Birch. It is a 2 bedroom plus loft with 2 full bathrooms and has been almost completely remodeled. The location is close to the main roads of Ski Run, Pioneer Trail and Hwy 50. Just a short drive/walk to the beaches, casinos, and Heavenly ski resort. Fenced yard and a large storage shed is a key feature for rentals, with most locals having dogs and needing extra storage space for winter toys and snow blowers as well as summer toys like paddleboards and kayaks. Rental income potential on this home is between $2400 and $2600 per month currently (as of 10/1/22).

For local Tahoe real estate market data, click on the following link: Lake Tahoe Real Estate Market

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