There are many reasons for the increasing home price in California. I could mention the weather, location, supply and demand, and most importantly our local economy. However, I believe that there are other elements that contribute to and may be the real cause of our rising home price value. For example, the cost of land, and the challenges to building in a coastline topography like ours make constructions very expensive.
There is also the expensive price of raw materials, the shortage of skilled construction workers, and the long list of demanding government regulations and codes need it to build new homes. Another major contributor to our housing shortage is Proposition 13. A proposition not embraced very well by our developers who feel no motivation in developing residential projects and feel more eager to build a big hotel instead because of the annual net revenue. Proposition 13 has helped many homeowners and even vacant landowners because the taxes are based on the original purchase price and not their current value. Therefore, in California holding land instead of the building become a choice for many. As a consequence, building more homes has been postponed for too long now considering our unstoppable growing population.
Based on these elements mentioned above the answer is simple too many people and very few homes will raise prices not only for purchases but also for rent. South Redondo Beach zip 90277 for example. currently has 49.3% renters, 43.9% homeowners, and 6.8% vacancies. This is a beach community with an average income of $112,000 very pricy homes & rentals which let me think that most of the income goes to housing payments. As a real estate agent, I feel the pain of many first-time buyers trying to own a home in the South Bay. Some of them are paying over $2,500 in rent and have a substantial down payment. They can afford a home (if there are some available) My concern is where are we going with this increase in home prices and rent? I don’t have an answer. The only thing I can say to you first-time buyers is to keep ready so when the time comes you are first in line. To you as a homeowner take advantage of the lower interest rate so you can pay off your home and perhaps purchase an investment property. I can’t advise in which way to go the only thing that is obvious is that people are building equity in their homes very quickly so take advantage of that.