Is Real Estate A Good Investment In California?  

BEST PLACES TO INVEST IN REAL ESTATE IN CALIFORNIA – COUNTIES

California is massive in terms of population, total land area and economy. It is undoubtedly one of the nation's most geographically diverse nations, with mountainous regions, coastal towns and deserts. With a broad and growing population and a diverse economic and business base, real estate investors will find plenty of reasons to consider adding California auction assets to their portfolio as part of a new growth strategy.

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THE REAL ESTATE MARKET IN CALIFORNIA

Median home prices in California have followed an upward trend since 2012, despite a rebound in some markets from the housing crisis marked by a wave of foreclosures. According to a report from the California Association of Realtors, median prices are expected to increase by 3.1 percent to reach $593,450. This is a moderate increase in comparison with the 7 percent increase in the previous year which resulted in median home prices reaching $575,800. The real estate market is diverse, and median prices exceed $1 million in large metro areas such as L.A. County and San Francisco.

The California Association of Realtors estimates that in most California cities the residential property market is characterized by high prices and a small inventory:

  • Housing affordability has for many years been a major concern in the State of California.
  • Residents allocate more than 30 percent of their monthly income, the recommended level, to the cost of housing and property.
  • Small inventory of housing available is partly due to local protests against urban sprawl and unregulated housing growth.
  • Throughout California, residents turn to renting rather than buying real estate.
  • Californians tend to transfer where real estate is affordable.
  • Higher salaries add strain to the local residential market.
  • Interest rates are expected to remain stable in 2019 through 2020, with signs of moderate rate hikes.

BEST PLACE TO INVEST IN REAL ESTATE FOR A BUY AND HOLD STRATEGY

Whether you are a novice or a seasoned investor, buying real estate in California and keeping real estate for an undetermined amount of time can be a good investment strategy. For several years of ownership this long-term investment plan can include selling off. In the meantime, real estate owners can rent out the house to generate income to cover new maintenance costs.

To decide whether a property meets your investment goals, measure the estimated revenue that will accrue from building the property for long-term or short-term leases. Rent income would be higher than maintenance, mortgage, insurance , taxes and other expenditures. Any gains which can be obtained by later selling the property should also be factored into the calculation.

BEST PLACES IN CALIFORNIA FOR A BUY-AND-HOLD INVESTMENT STRATEGY

LOS ANGELES COUNTY

The Median Home Price in L.A. That is $610,000.3 This means that home buyers must make at least $170,000 per year to qualify for a mortgage, assuming they have $28,000 for the 20 percent down payment required. Currently L.A. County leads the way for the average wage earner not able to afford an average-priced home when it comes to housing expenses. At some point in 2018, Los Angelenos spent 75 percent of their income on housing expenses alone, according to Attom Data Solutions.

ORANGE COUNTY

Inventory of available houses for sale in Orange County has improved with the board of the local realtor reporting that the market has shifted from a seller's market to one where buyers have more options. While the supply situation has eased up by 13 percent year-over-year with inventories, it is not a buyers' market, and the environment is mature for investors to beef up their portfolios for some of the O.C.'s selected properties.

SAN BERNARDINO COUNTY

San Bernardino County's housing market has trended upward in terms of price, demand, and closed sales. Tight inventory has placed pressure on a hot housing market and driven prices and demand. While the county has been successful in resolving housing affordability problems, funding affordable housing services, rents have risen by 5 percent annually, restricting the ability of average wage earners to save for a down payment. The Riverside-San Bernardino metro is considered the least expensive rental housing area in Southern California, but rent prices still surpass those in the same jurisdiction.

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