California Real Estate Market Update

Article by Abhisekh Mitra

Southern California was one of the first places hit by the mortgage crisis and housing market issues. Because of its popularity, population, and skyrocketing home prices, the California real estate market was one of the first ones to go. However, since the markets took a dive a couple of years ago, the downward spiral has gone on uninterrupted, simply because it is such a large market. What might only affect a limited population for a limited time in a state like Ohio or Tennessee is affecting millions on an ongoing basis because of the sheer size of things. They say that everything is bigger in California. That must include the real estate market, its crash, and its rebirth (which is still pending).

While more people ARE buying in the California real estate market as of late, they’re buyers that had intentions of buying in the future. They are buying now instead because of the big fat tax credit. Therefore, in January, when home sales are down, a large part of that can be attributed to the buyers making their purchases early to get this tax credit. The California markets were one of the hardest hit in the country, which isn’t surprising. Homes in California are bigger, prices are higher, and there are more people than in many other states (added together, even).

The California real estate market has reached its bottom. However, the climbing back up will likely be more of a yo-yoing process than an actual climb. People will buy, but then some won’t. Prices will remain low, but then spike prematurely. In the past, prices would spike at the first sign of improvement so that everyone could cash in early. After the economic meltdown, it’s not likely that everyone will be so quick with their trigger finger. Therefore, more affordable homes will be available to buyers who can’t afford much, encouraging sales.

Predicting the market is harder than predicting the weather. As anyone has seen in recent years, the market CAN change on a dime, and it has. The California real estate market certainly isn’t down and out, but it’s going to be an ongoing task to get it back to where it once was. For now, the best way to handle the situation is to watch what happens, because there is nothing more useful than the ‘wait and see’ approach.

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