Homes in Southern California See Near All-Time Price Highs

Southern California home sales dropped 5% in May 2017, yet home prices have still hit a record high in that areas.

According to recent real estate research in California, approximately 8.5% fewer homes were sold in Los Angeles County since March 2017, but home prices are still at a near-recordĀ high average of $485,000. This is almost as high as the all-time high of $500,000 in 2007.

Southern California is hardly the only part of the state where real estate prices are testing the ability of workers, families and real estate investors to afford homes. Prices in May 2017 in California hit a record high in Orange County, California, and San Diego County, California.

Also, Forbes reports that the San Francisco, California area is seeing soaring median home prices. Around San Jose, Sunnyvale, and Santa Clara, the median home price topped $1 million in the first quarter of 2017. It was just $535,000 a year ago.

Why the Rise in Home Prices in California?Ā 

The biggest reason this is happening is not enough homes are being built in much of California’s major metro areas to meet booming demand. This is because it is harder to get building permits in much of California.

On the other hand, Texas has a very liberal policy on building new homes. Both states feature cities with high job growth; San Francisco and Oakland added 356,000 new jobs in 2016, and in Dallas, there wee 413,000 new jobs added in the same period. But in San Francisco, only 20,400 new homes were built, and there were 120,000 new ones built in Dallas.

This difference in building permit policy has had various effects. Homeowners in Calfornia are enjoying huge increased in property values, which is great for them to pull out cash and invest in real estate. But for people who want to buy, it is extremely difficult to buy in current circumstances. Many home buyers and real estate investors are priced out of the market.

In areas such as San Antonio, Texas, prices only have doubled in the last 20 years or so, but many more people can afford to buy a home for themselves or for real estate investments.

As home prices in California have soared, we have seen increasing demand for under market value real estate investments in San Antonio. Investors want to see high-ROI investment opportunities in Texas. Many affordable homes are available in San Antonio for under $60,000 wholesale. With $20,000 in rehab, the home can be rented for $800 per month. That is the type of positive cash flow that many California real estate investors want to see.