California Real Estate Boom

California Real Estate Boom

For the past five years, the United States has experienced a large housing boom. Low interest rates and increasing home values make real estate a competitive market. California is experiencing the most significant boom, boasting a 22% increase in home prices—leaving the median price of a single-family home a record $428,280.

With its breathtaking views, culture, beaches and different ecologies, it is no wonder many migrate to California. The northern Californians are more likely to enjoy all four seasons, while southerners enjoy the balmy sea weather with temperatures rarely below 60 degrees even in winter. Generally the closer you wish live to the ocean, the more you are going to pay for housing. Even though the price for a coastal home can range from $620,000 to $1.3 million, the rate of appreciation is astounding. In the past year, California homes have appreciated 25 %. For a $620,000 home, that's a $155,000 gain.

The boom prices in major cities are fueling a construction boom in the cities' outskirts. Contractors in California have dubbed the counties east of Los Angeles an ‘inland empire', because of the vast number of people who are willing to commute 1 – 2 hours a day for work to obtain more affordable housing.

Media reports suggest that this boom is a ‘bubble' that will burst and lead to a recession. This will only happen if there is a sharp decline in home purchases, but leading analysts argue that the decline will be a soft landing since the demand for housing will never go away.

Another speculation is that this in surge real estate will replicate the rise and fall of the stock market of the 90s. Unlike the stock market, which is based on national and global economy, real estate is predominately a local based economy. Real estate prices in California do not affect the prices in New York or Arlington, Virginia. Real estate is decidedly more stable than the stock market where buying and selling happens at a much more frantic rate.

If you are looking to invest in any type of real estate, be it a single family home, condo or a beachfront property remember that the real estate market will rise and fall, but in general real estate prices rise in the long term. Enjoy your property and hold on your investment for the long term.

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California Real Estate Boom

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