For those of you interested in California, and specifically, southern California, Orange County, etc. I thought you might be interested in this. Globestreet Article
Thanks for sharing Karen. This is a good article. I am in commercial construction and have seen a real rise in the number of hotel projects that are starting to get off the ground. Its great to see and an exciting time to be a builder in Los Angeles right now.
Thanks for sharing this article Karen. We have seen an increase in the home prices in SoCal creeping up for the past few years, and it sounds like they'll increase even more next year which isn't all that exciting while trying to pickup more real estate. We'll just have to look a little deeper!
There will still be deals out there that will be up for grabs, but soon enough the bottom will drop out and hopefully it will be even more plentiful for all!
@Peter Mckernan i wouldn't hope for the bottom to drop out, there's no reason for that to happen. This area will always have perfect weather, high demand, good economy, etc. all of which create demand. The bottom dropping out in southern California would mean America is in BIG trouble!
Based on what I saw in the statistics from realtytrac and other statistics presented by C.A.R, it looks like housing prices have reached a plateau recently. I agree with the article in that home prices have gone up however I am not sure they will rise by double digit % by next year. The article also states that inventory for "new housing" is low, does this include only new homes? More people are now "above water" on their mortgages and are able to sell, or people want to sell to get the equity from their now high priced home leading to a rise in inventory in various cities. If I remembered correctly home loan apps were down 5% from last month, and home sales are down 10% from last year. With housing prices going up, affordability is going down. With affordability down, less people can afford to buy, therefore slowing demand. A general rule of supply and demand in economics is: slowing demand and growing supply, results in stagnant or lowering of pricing. I do not think prices will drop, but I do think they will stay stable and not rise like the past few years. What have you personally seen or feel about the market?
Sorry, let me clarify. When I said I that I wanted people to interpret it with a grain of salt. I wouldn't want that situation to happen with the housing market, and I agree the American Economy would be in a bad place. I would want the prices to drop a little bit, but that's all I meant.
As the saying goes, "all real estate is local" However; every local area, especially here in southern California has a variety of sub markets. When discussing appreciation, supply and demand, etc. it's necessary to break out the "specific" market you are referring to.
For instance, the coastal areas have a limited number of homes that exist, with very little potential to add more. Therefore; for all those people that want coastal properties (the ocean side of the 5) the number of properties available for sale or lease are limited, driving up prices. If you break it down even further and get to the west side of the PCH, properties are even more rare, and much higher valued due to the proximity to the ocean and the views. All of these areas have many properties that are devoted to the vacation rental market that command very high dollar rents during the peak months of the year. All of this keeps demand for properties in the coastal areas high, and supply low.
On the other hand, the further inland you are willing to go, the greater the supply of homes, land, etc., and the lower the prices, with a lesser demand.
The point is, when looking at markets it's important to know specifically what market a person is looking at, the niche that is in that market (multi family, single family, hotels, retail, office, etc.) because the devil truly is in the details.
I think we're still in the early stages of a 10-12 year real estate rally. Prices will continue to rise for another 8-9 years, but at single digit increases.
I'm telling my clients to buy to live OR to flip in Southern California.
Prices will continue to climb for the following reason in Southern California:
1) The demand is still huge for CA real estate
2) Interest Rates are still low
3) The age group of 25-32 that can't buy today will be looking to buy in the next 2-5 years because of rising rent
4) Continued rising rent will get ppl to buy. I have a couple clients I'm helping to buy because they are frustrated with rising rents
5) The type of homeowners today have more equity stake in the homes than the owners in pre-2007 era.
6) I believe wages will continue to rise some more in the future so that may bring in more buyers from the middle class
7) The US economy and job market continues to gain strength
It's nice to finally read a positive article about OC real estate! Everything I've been seeing for the past month or two has been gloom and doom. What I have begun to look at is who is writing/promoting the article and what is their end game.
Home builders and highly leveraged buy and hold investors tend to promote the positive data, while flippers and want-to-be home owners will promote the negative.
It'll sure be interesting to see where the market goes and what happens when rates finally increase. Maybe we should all put $5 in a pool along with our guess at where we'll be in 2 years... winner take all :)
Anecdotely, I have seen the Multis development in LA are really filling in fast. There seems to be a tear down land grab going on for the multis currently like never before. I can't see any let up in the forecast with the rents way up and they keep climbing 5 to 10% annually. It makes sense, as in my immediate hood is nearing 850k for sfh average. The buyers are thinning out quickly at that level. Renting LA is becoming only option for many at these prices.
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