The “California Housing Market Report and Predictions” article released by Gord Collins of Manage Casa, explored the key factors that will drive the California market for the years ahead. Below are key excerpts from the article.
California is a special place to live and rent, and to buy and sell a home. The market diversity is hard to comprehend. And the battle for homeowners hanging onto proposition 13 benefits is very different for young buyers who discover that renting an apartment is better.
It’s this dynamic pull of outrageous wealth and outrageous regulations that makes it hazardous to invest in real estate in this state. Definitely wise to hire a Realtor.
No other economy is as diverse and dynamic. It’s the opportunity that attracts millions of newcomers to live and start businesses here. Most tech startups for instance launch in the Bay Area despite the high cost. Employment and wages have grown and that has put pressure on the California housing market.
WHAT’S HAPPENING AND WHAT MAY HAPPEN
A few pundits believe the California housing market is well past peak. Yet economics, demographics, buyer demand (and last 2 months sales stats) seem to refute that notion. Millions of apartments need to be built in the next decade, a good portion, right here in CA to soothe in insatiable demand (housing crisis).
California’s economy grew 4.7% in the 12 months ended in February compared to the national rate of 2.8%. It could grow at a 2.55% pace in the next six months — faster than the national 1.59 – report from Mercury News.
With interest rates fears gone, and new trade deals with China, any negative economic aspects could disappear. That would mean fast rising prices again for the whole state.
KEY FACTORS IN CALIFORNIA’S HOUSING MARKET GROWTH
1. wages create prices pressure on housing
2. demographics – lots of millennials buying and babyboomers selling
3. interest rates – staying stable
4. migration – slowed to keep prices stable
5. cost of business – extremely high (would you like to see my San Francisco parking fee?)
6. home prices – wickedly high
7. rent vs buy – for most the idea of purchasing is a hopeless dream
8. multifamily new construction – picked up nicely but NIMBY’s still winning
9. taxation and tax savings – much better this year With taxes dropping, interest rates stable, wages rising, prices stable, mortgage requirements reasonable, and rising personal savings, why aren’t people buying? Simple, they’re hoping prices will plummet.
A HEALTHIER CALIFORNIA
There are more homes for sale and more buyers. After a strong lull, the upward march on California homes prices continues.
Zillow gives California an improved 9.6 out of 10 rating and a revised forecast of 7.6% price growth prediction for the next year.
“We’re seeing interest and money shift away from the overheated markets into less expensive secondary markets…Even if we see some markets overheat and demand softens slightly, that doesn’t mean prices will go down” — Javier Vivas, director of economic research at realtor.com.
To read the entire article addressing “California Housing Market Report and Predictions”: https://managecasa.com/articles/california-housing-market-report/
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