Here are a few things you should know about California Real Estate!

By pshirazi | May 7, 2018

Investing in California Real Estate

If you’re a home builder or rehabber who will finish your project soon, if you’re a speculator who will flip an acquisition, if you plan to split a property into several rental units or condos, if – in other words – you have an investment horizon of only a couple of years, now is a great time to invest in California Real Estate .

On the other hand, if you’re a builder with a multi-year project, if you plan to buy and hold rental property, if you’re investing with the intention of selling out after five years or so, be very wary of getting into LA or San Diego or the Bay area right now.

And if you already hold property and are looking for a good time to sell, you should start the process.

It’s not so much that home prices are in danger of falling anytime soon – at Local Market Monitor we’re forecasting that prices in all California markets will rise over the next three years – but that the risk of prices peaking and then falling will increase sharply every year. You never know what will trigger the end of a boom – or exactly when – and that’s what many California markets are in right now.

California Real Estate Stats in selected in cities:

The table of stats shows that much of the LA and Bay areas are already above the 15 percent threshold for over-pricing when you compare the current average home price with the ‘income’ price. Over-pricing gets serious above 30 percent and into the danger zone above 40 percent. With prices rising at 7 to 10 percent a year, that danger zone is only a couple of years away for Anaheim, Riverside-San Bernardino, and San Francisco.

It seems only yesterday that California home prices were falling and foreclosures rising, but the tech boom and the continuing attraction of California as a migration and immigration destination quickly ran up against the reality that very little home building has been accomplished in the state for more than a decade.

With average home prices sky-high in many markets – in San Francisco now more than $1 million –  investments in rental property will continue to be needed but this is where investors must be very careful not to overpay. Rents are far less volatile than home prices but if you plan a five year investment you could easily be looking at a very poor market when it comes time to sell. Don’t include expected appreciation in calculating the purchase price you’re willing to live with, and walk away if the asking price isn’t right; bad investments never look bad in the first couple of years.
Reference: Article publishes in March 2018 in Forbes in regards to Investing In California Real Estate, Author: Ingo Winzer is the President of Local Market Monitor, Inc., a North Carolina based residential real estate forecast company that provides MSA, county and zip code analysis nationwide to investors.

Based on the above report and our research about California Real Estate Market, we recommend the followings:

 

  1. If you are an investor, look for a short term (2-3 years) or a long term result. Buy within your affordability power to avoid selling when market in not hot.
  2.  If you hold a property in California and considering to sell, it’s a good time to act on it, and maximize your profit when selling during hot summer market.
  3. If you are downsizing or upgrading, it is a good time to start looking and take advantage of the low mortgage rates. Since you are selling and buying right away, the market fluctuation will not effect you.
  4. If you are a first time home buyer, make sure to consult with a knowledgeable expert so you will buy your first property in the right neighborhood with the right price and avoid over paying.
  5. There are many cities in California that are still undervalue and have not reached their optimum pricing. Please contact us for more information.

link to the full report: https://www.forbes.com/sites/ingowinzer/2018/03/01/investing-in-california-real-estate-here-are-a-few-things-you-should-know/2/#6223f7651132

Posted in Real Estate California

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