In the past few months, the property values and purchase rates of houses in California have risen dramatically, particularly in certain metro areas. The rise in property values, though concentrated in San Francisco, Los Angeles, and San Diego, has been felt across the West Coast and might also have implications for the U.S. housing market as a whole. The price gain in these areas in California has been double that of the mean price gain in the top 100 cities in the country.
What it Means for Homeowners
Fear of a West-Coast housing bubble might instigate policymakers to change mortgage rates. Since it seems that the suppression of mortgage rates seen around the country is the main reason that purchases are rising, policymakers might feel pressured to raise rates and stabilize the growth of this market.
Around the country, things are not booming as they are on the West Coast. Climbing prices might discourage potential buyers from venturing into the housing market, so if national policy turns to raising mortgage rates, the West Coast boom might stabilize, but the rest of the country’s housing market might fall into stagnancy. Policymakers might have to choose between reigning in California’s market (allowing other parts of the country to become less active) and permitting the risks of an excitable market here in the West.
What it Means for Land Bankers
Sky-high selling prices and purchasing rates are good for land bankers. First of all, high costs of property ownership in urban centers will push more people into the suburban and surrounding areas, where the cost of living is bound to be lower. Suburban expansion is the “path of development” land bankers are always talking about – as people move out of cities, they need transportation, education, entertainment, and industry.
More subtly, the rising property values are a sign of the health of the West Coast Economy. This economic health is centered in San Francisco, Los Angeles and San Diego – three cities around which land bankers buy land. When the economy is healthy, an area becomes an appealing target for growth developers. That’s exactly what we’re seeing, especially here in southern California. Developers have set their sights on these areas and are rushing in to take advantage of the fast-paced economic activity.
What it Means for Other Real Estate Investors
If you’re invested in California real estate property that’s already been developed, now might be the time to sell. People are willing to buy at high prices, and property is changing hands quickly. To us, this looks close to the peak of the cycle.
Land banking is a safe, long-term investment in a tangible asset. Anyone can invest, including working college students and people with IRAs (but no cash on hand). Are you interested in building a safe retirement and leaving a surplus to your family? Land in the path of development in Los Angeles county is inexpensive and easy to acquire. Contact us today.