Even rising mortgage rates are unlikely to shut down the housing market. Job-rich coastal markets will continue to experience high home prices and huge unsatisfied demand, driving more jobs and buyers into affordable inland markets. High land prices may encourage some builders to overshoot local markets, but ultimately, product and pricing must match the availability of homebuyers. As a result, some move-up segments may become satiated in certain locations. However, massive amounts of pent-up demand will remain throughout California, especially in locations readily accessible to major job centers.
New immigrants challenge homebuilders to provide affordable, entry-level housing.
Therefore, builders will be challenged to find better ways to serve rapidly growing ethnic buyer segments. As immigrants are becoming well established in their communities, they are more actively forming new households and buying homes. California receives about 200,000 to 250,000 of the nearly one million new immigrants that arrive in the U.S. each year. During the next few years, California will experience rapid increases in homebuying among immigrants, as they become better established in their communities. Homebuilders who target the housing needs of immigrants will find a tidal wave of potential buyers.