Considering that the West Coast was the functional ground zero of the 2008 housing crash, it’s always heartening to hear that California’s property sector continues to stabilize. While much of California’s most sought-after property is condensed in urban areas, and city markets have shown some of the strongest rebounds in the past two quarters, it appears that the Golden State’s real estate has paced an even more pronounced recovery than those found in other hard-hit states. Retrospective analysis of April’s market figures demonstrates that statewide, California’s property made exceptional value gains.
As disclosed by the Los Angeles Times, median home prices in California rose 3.5% from March and a full 22.7% from April 2012. Citing figures from DataQuick, the median home price climbed to $324,000 last month, which marks the highest median value since 2008. All signs point to this surge in property values being regionally comprehensive, as both the Los Angeles metro area and greater southern California as well as the San Francisco Bay Area demonstrated similar market trends.
So What’s the Cause?
All things considered, the escalation in home values seems driven by a trinity of economic incentives – low interest rates, pent-up homebuyer demand, and an increasingly stable local economy. While the California (and nationwide) job market has nowhere near reached pre-recession health, it has rebounded to the point where many previously hesitant buyers are looking at more secure assets and professional prospects. In addition, the mortgage industry has also paced a substantial recovery since Q4 2012, with the nationwide default rate having hit the lowest point in three years. Lending bodies are more comfortable providing home loans, and prospective homeowners also have the windfall capital necessary to manage newly opened mortgage.
Beyond this, the mortgage rate remains at record lows, leaving the prospect of opening a mortgage a less intimidating and more financial sustainable prospect. As I’d noted in a prior post, suppressed mortgage will likely, at least for the immediate future, provide continuing momentum for the housing recovery. Much of the potential health (or lack thereof) in the housing market seems the ability to attract first-time buyers to the fold, the overwhelming amount of which are looking at more restricted assets than those who already maintain property. Many likely saw their parents or peers get burned by underwater mortgages or toxic equity after the crash, and will require serious validation that their own purchase ventures won’t be similarly troubled.
It seems a coalescing of these factors, combined with accelerated homebuyer interest, have worked wonders for California’s property market since the opening of 2013. April proved to be an exceptionally good month, and even the foreclosure rate has dipped remarkably since the same period last year. The Los Angeles Times report noted that only 13.5% of previously owned homes that were sold last month were foreclosures, compared to a full 30.3% in April 2012. Assuming conditions maintain as is, we’re slated to see a standout year for West Coast property, which will likely be partnered with bumper profits among homebuilders with a strong operation foothold throughout California.