California Home Prices Jump 20% in the Last Month (VIDEO)
This ever-changing industry is shifting and shaping a new future. Currently, we already see big advances in the Los Angeles market, with close to 40% of homes selling at $14,000 above the asking price, according to a report on Zillow. This heavy indication of heavy demand and lack of supply is only the beginning statue of what we will see take place in the next 20 years.
As population rises, competition will become the toughest it’s ever been, with bidding wars increasing prices, and with affordability dropping, only 30% of Los Angeles County residents are homeowners.
And as the uptick of prices seems scary, the extreme price revenues that will come into play with higher-end development will become a big chunk of history as it will change the big real estate players to peak in this industry. Development also includes other large cities, such as San Jose, San Francisco, Salt Lake City, and Seattle. This fast-growing economy shifts towards ultra-luxury spec homes, where Los Angeles has the most deep-pocketed investors.
Los Angeles County Real Estate is an At Times High
The housing market whether it is an urban row house, transit-oriented development, or a new type of tract housing, starter homes, and affordable rental units for young adults are potential goldmines for developers who map out the costs, type of projects and build affordable housing at scale.
The pricey changes in real estate from affordable housing shortage to a new urban crisis affecting cities, and a string of tragic events due to the costly natural disasters and tax uncertainty propose by Biden’s administration’s policy has greatly impacted the economic tailwind of last year, with an expected expansion and larger structural changes in the real estate market. The C.A.R.’s forecast sees moderate gains in existing single-family home sales, and as “solid job growth and favorable interest rates will drive a strong demand for housing” says C.A.R. President Geoff Mcintosh.
“However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market.”
Many real estate brokers think the rise came due to the COVID-19 pandemic. C.A.R.’s forecast of the average 30-year fixed mortgage interest whereas rates will increase to approximately 4.3 percent in 2018, up from 4.0 percent in 2021, and 3.6 percent in 2016.
Real Estate Prices Due to COVID-19
With an extra short supply, and even with Los Angeles residents suffering financially, prices are continuing to rise, according to the Local Records Office. You will need an income of $120,000 to buy a home in Los Angeles in 2018. And prices of condos are reportedly $90,000 higher than last year. The problem, however, is that homeowners do not want to sell and buyers cannot afford the prices. Despite the dips in September, prices are up from $24K to $30K from one year ago. In the next four years, forecasters are considering all the factors that will come into play – from defeated regulations, a growing economy, to reduced immigration.
- Employment already good and is rising
- End to Obamacare?
- End of Dodd-Frank’s restrictions on lending
- It will take some time for mortgage rates to rise
- Still, there is not enough housing to continue to house Los Angeles growing population (recession)
Various Factors Are Causing California Homes Prices to Rise
- Demand for housing – as an overall heightened demand –“creating all cash-bidding wars” in some cases
- Supply in housing – is far from what is needed
- Mortgage rates – continuing to below, in light of the global economy slackening
- Down payment and mortgage lending rules – as banks are withdrawing, the FHA loans are offering down payments as low as 3 percent
- Employment – very low and remaining low
- Buyer income – low and also not rising by much
- Home prices – high and rising – out of reach for many to consider buying and homes in Los Angeles are grossly over-priced
- Demographics – Millenials are moving into family and home-buying years, with LA millennials at the lowest rate of home buying
- Number of renters – is increasingly growing
- New home construction – is slow (from 100k to 140k per year)
- Economic Foreign Trade – Trump expects to reduce the U.S. deficit
- Election Year – Voters are uncertain what Trump will do
- Taxes on the sale price of a home – is great for sellers
The Growth in Commercial Real Estate is Expected to Rise
As developers and commercial property owners will need to focus on providing a great space with the right location, they will thrive when they focus on an environment that will land for success.
The trends in real estate generally follow in the business world, says Watch, and “as more women and minorities occupy C-suites, real estate companies increase diversity among their agents and brokers, too.” Watch also mentions that banks are becoming more constrained to lending due to the new regulations.