Property investors and homeowners should carefully look at and asses an area’s housing market to ensure what they are buying would give them a proper ROI. When it comes to California properties, is buying one a wise investment decision?
California homes, unlike most housing markets in the US, experienced small declines this year. However, the California Association of Realtors (CAR) expects home prices to shift upwards as it reached a new median all-time high of $611,190, a lot higher than its price a decade ago.
California Housing Market Report
In the past 13 months, home sales only had small declines. Sales increased by 4.6% in the properties with prices ranging from $400,000 to $749,000. Condo prices are also picking up, with properties selling at $470,000 at an average.
Whilst there has been a healthy inventory in 2018, the listings decreased in number this May. This may indicate that a number of sellers have successfully sold their homes and the market is slowly bouncing back. However, this small supply of California homes in 2019 is causing buyers to pay more for their houses, causing prices to appreciate faster. If this trend continues, more property buyers willing to buy can no longer afford to do so.
In June, the number of single-family homes sold totalled 389,690, down by 5.1% from the same period last year. The statewide median home price remained unchanged from May and increased by 1.4% from June 2018. However, homes sales across all states declined by 5.9% in June.
Los Angeles and San Diego with Largest Declines in Home Sales
Southern California homes sales were down by as much as 9.1%, with almost every county posting dips in sales. The areas hit the hardest are Los Angeles and San Diego with home sale declines of 12.6% and 12.5%, respectively.
The Los Angeles housing market, though considered as among the top premiere housing market with homeowners and investors, is still an expensive area to buy a home. According to Zillow, Los Angeles median home value is $694,200 and it is expected to appreciate by 3.0% more within the next year. Home values will have a modest appreciation rate throughout 2019, signalling buyers to take a pause and wait for home prices to stay within their budget.
As for San Diego property buyers, investing for the long-term has always been its strength. San Diego is among the fastest-growing areas in the US but is often overlooked for the more popular Los Angeles and San Francisco areas. Investing in rental properties in the San Diego is a great option as rents are forecasted to rise by 8.4% Home price appreciation is expected to be between 4% and 5%. Current median home values in San Diego is at $632,000, up by 2.3% in the past year.
Since the area has a few inventories, the increasing demand will push prices further. This is particularly true for the number of renters moving into the area. San Diego real estate shows an increase in rental prices and steady growth in home prices, perfect time for investors to come in.
Property buyers in both Los Angeles and San Diego areas can profit if they time their purchases before inventories dwindle and prices go up.