'Modern' Optimism Reigns - Page 2

Another possible new impact could be an increase in the number of years an owner has to live in a home to earn a capital gains deduction when selling. If enacted, this will likely contribute to continued low inventories.

One difficulty meeting that challenge was documented by the California Legislative Analysts Office, which reported that building permits take an average 2.5 months longer for issuance in the coastal metropolitan areas than the rest of the state or the country. The current U.S. administration has vowed to work on such issues.

"Home values may go down because of the rush of inventory of new construction, with many smaller units—condos and townhomes—coming up in the $1.5 million range," Lombardelli says of the South Bay, again citing the strength of the prevailing Eichler price range. "The sweet spot is around $2 to $3 million, which is where the majority of buyers [here] are."

Adelmann dismissed the suggestion that controversy in the White House could affect the market, replying, "I think it really [would take] more of an effect on the whole economy, and we haven't seen a negative effect on the economy."

Assessing the modern home market for the coming year, Adelmann conceded, "You can't keep having double-digit [percentage price] increases every year, and we've had double-digit increases the last four years or so."

Basically, however, neither of our local experts could bring themselves to be pessimistic, or one might even say conservative, about 2018.

"I don't see a bubble bursting unless something unusual happens, like the mortgage crisis in 2008," says Adelmann. "I think eventually the bubble will burst, but I don't think necessarily in 2018."

"The luxury market has gone down a bit, and buyers seem to have a minimalist mindset. It is the time of the modernists!" bubbled Lombardelli. "Efficient living is on the rise with this economy. I am very excited."