Christmas week is typically the low point of the year for real estate transactions. Even homes that have been on the market are often taken off over the holidays, so that inventory declines significantly.

This year was no exception. Fewer than 60 detached single-family homes in Livermore were listed on the Multiple Listing Service, compared to 119 a month earlier. That’s a significant decline – but typical of the seasonal change.

But now compare this Christmas week to the same time last year, when Livermore had a mere 42 detached single-family homes listed on the MLS.

Similar stories can be told of Pleasanton, Dublin and other Bay Area communities. In fact, this uptick in inventory can be seen in many regions of the state.

Sales were down for the year compared to 2017, but mostly that was due to lack of availability of homes to sell. There were still lots of eager buyers, especially first-time homebuyers eager to enter the market.

For many of them, the last months of the year offered better opportunities than could be found last Spring.

The market has slowed and inventory climbed. Some are wondering whether this is simply a more exaggerated version of usual seasonal adjustments or if we are in for more long-term changes.

After six years of double-digit home price increases creating a true “sellers’ market” in California, will 2019 be the year the market turns? Or, as some analysts contend, has the market already started to shift?

There are plenty of reasons to think the market is shifting – and equally compelling reasons not to.

Statewide home prices have long since returned to pre-Recession levels. In the greater Bay Area, we’re already at 18.5 percent above previous highs. Alameda County is nearly twice that, with the median home price at $960,000, 35 percent higher than in 2006.

But gains appear to be slowing. Statewide prices increased just 5 percent between August 2017 and August 2018. That’s historically pretty average, but well below recent trends.

Homes are taking longer to sell. Instead of being snapped up in a week to 10 days with multiple offers, many homes linger on the market three or four weeks, often requiring price adjustments before selling.

In part that’s because fewer potential buyers are able to afford to purchase homes at current prices.

The national Housing Affordability Index, which measures what percentage of households can afford to purchase a median-priced home, was at 53 percent for the third quarter of 2018. In Alameda County it was at a mere 18 percent. Even statewide the index was only at 27 percent.

Inventory remains low, but given how much it has risen from a year ago this time, we can see that sellers have a little more competition and buyers have more to choose from.

Mortgage interest rates are up and expected to continue climbing. Most economists predict rates on 30-year fixed-rate mortgages will hit the mid- to high-5s – possibly up to 6 percent – by the end of 2019. Each increase in interest rates reduces affordability for potential buyers.

“Buyers who are able to stay in the market will find less competition as more buyers are priced out but feel an increased sense of urgency to close before it gets even more expensive,” predicts Danielle Hale, chief economist with Realtor.com.

Many sellers may decide this is the time to make a move. Already we are seeing Baby Boomers downsizing or moving to less-expensive areas, either elsewhere in California or even out of state, using the equity in their current homes to fund their purchases.

Despite all this, employment is at historic highs, especially in the Bay Area. Millennials are forming households and looking to enter the housing market.

Housing starts are at a 10-year high, although California is still about 30,000 units per year below demand.

And consumer confidence remains high.

Weighing the pros and cons, a lot of economists predict the coming year will be a more “balanced market” than we’ve seen in a long time – good news for both buyers and sellers.

Leslie Appleton-Young, chief economist for the California Association of Realtors, foresees a market in which sales are flat or down slightly, with modest prices increases in the range of 3-4 percent.

Lawrence Yun, chief economist for the National Association of Realtors, agrees.

"The forecast for home sales will be very boring – meaning stable," he said.

The wild cards: trade wars, the impact of the new tax codes and volatility in the stock market.

An escalation in trade wars could impact both employment and the stock market, creating uncertainty for those looking to buy or sell real estate.

Changes to federal tax law that were enacted by Congress in 2017 took effect in 2018 and will show up on most people’s tax bills this coming April. Many California homeowners will find previous tax deductions reduced or eliminated, which could exacerbate the affordability issue for move-up buyers.

Volatility in the stock market could influence real estate in various ways. Buyers who are dependent on stock investments, including from 401ks, to fund their home purchases could find they have less to work with.

On the other hand, investors may jump from stocks to real estate if the market falls precipitously, such as happened in 2008-2009. That would add upward pressure on home prices.

If you are thinking about buying or selling in 2019, contact your local Realtor today for a market analysis of your neighborhood.

Cher Wollard is a Realtor with Berkshire Hathaway HomeServices Drysdale Properties, Livermore.