California has seen its share of challenges in the past few years, but it remains one of the most lucrative places in the country to invest in real estate. For example, despite wildfires that claimed many homes and businesses in recent history, and a slight downturn in the housing market during November 2019, demand for properties in California continues on an upward trend, notes Shopoff Realty Investments headquartered in Orange County. It’s no wonder then that property prices in the state continue to rank among the highest in the country, while offering a lot of potential for investors and home builders alike.
Sustained High Demand
Due to the attractiveness of California both as a place to live and a place to invest, demand continues to outstrip supply, notes Shopoff Realty Investments. This is a factor in the steady increase in median home prices in several areas of the state, including Southern California and the Central Valley, with 4.4 percent and 5.3 percent yearly increases, respectively.
Couple this with supply that’s consistently low, and you have a formula for investment value. The number of home listings across the state fell for several months in a row during the late 2019 season, with more than 20 percent fewer listings in November 2019 compared to the same month a year prior.
Multi-family construction starts also rose in October 2019 compared to the same month a year prior, but single-family dwelling starts actually fell eight percent. To combat this demand and supply imbalance, previous legislation was aimed at making building new housing in the state more attractive to developers to help make up some of the shortfall. For example, a 2018 bill aimed to rezone land in order to accommodate the need for local housing, while providing more transparency into how much residential zoning is actually needed.
Unique Opportunities For California Real Estate Investors
Despite an inventory that’s struggling to keep up with demand, some areas of the state enjoyed an increase in home sales, notes Shopoff Realty Investments. Record low unemployment rates and an expected continued growth in the economy are pushing the housing market in California forward.
Although the real estate market can change, it may be a good time for people to break into the California real estate market, according to Shopoff Realty Investments. For example, partially due to limited supply, the rental rates in the state continue to rise.
The price to rent ratio in California continues to be high, which means it still makes sense for many people to consider renting – which means more selection of quality tenants and a demand for luxury rentals.
The Market Outlook Is Good For California
Despite some of the challenges facing California’s housing market, it is not showing signs of slowing down anytime soon, explains Shopoff Realty Investments. With home sales topping $400,000 per month during the last five months of 2019 (which bounced back significantly from earlier in the year), and a steady rise in median home prices, it may be an opportunistic time in the California market.
For buyers, whether first-timers or seasoned real estate investors, low interest rates continue to provide incentive as mortgage rates historically follow the trend. With the national economy continuing to grow, along with a rise in personal income, look for the housing market to heat up even more in the future.
This article does not constitute the rendering of investment, legal, or tax advice. You should always consult with a qualified attorney, CPA, or financial professional on all investment, legal, or tax matters. An investment in a Shopoff limited partnership involves a high degree of risk, including the possible loss of your investment, and is illiquid with an uncertain liquidity date. Information in this article does not constitute an offer to sell or solicitation of an offer to buy any security. Securities offered though Shopoff Securities, Inc. Member FINRA/SIPC
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