A couple of days ago, a client sent me an article with 5 opinions suggesting the housing market was poised to continue its downward slide. I responded by saying the future is unclear but that locally at least, the numbers remain consistent with an improving market. Inventory numbers were only 5% changed to the upside, which by all historical measures, save for the market’s heyday from 2003-2005, indicated a lower level than spring usually affords. Moreover, pending homes sales data suggests that the market is vibrant across many price points with over 39% of all homes, currently under contract and more than 31% if you exclude short sales. (Short sales typically take a longer time to close so those pending numbers get thrown off by the clogging of long drawn out bank negotiated deals).
For so long, we have been hearing about the demise of the Golden State; budget worries and stalemate in Sacramento; the third largest number of foreclosure actions in the nation as measured by state; and on and on. If you were to accept those notions as true and indicative of the future, you could not help but conclude that the luster was off California. Yet, like a championship fighter, you can’t count out the nation’s most populous state, because it’s been knocked down before, can take a punch, and when really backed into a corner, always has the hope of a last minute knockout punch.
When President Obama began his reelection bid this past week, he started his fund raising in sunny Southern California. California, home to the largest port in the US, the movie industry, Disneyland, the birthplace of aerospace… He ended by visiting Silicon Valley, home to the iPhone, cloud computing, the world’s largest search engine, social networking and birthplace of the mouse and microchip. Furthermore, Dow Jones Venture Source reported yesterday that 40% of the nation’s venture capital in the first quart of 2011 went to firms within California – the next closest state, Massachusetts, received just 12%. If California is on life support, then perhaps think of it rather than like the old “Iron Lung”, stationary and immobile, but as Darth Vader, agile, powerful and not to be messed with.
Throughout her 160 year history, California has always been the land where dreamers of big dreams go to make their dreams come true. All those dreamers have to live somewhere, and one thing is for sure, it won’t be under a rock. Rather it will be under a red tiled roof maybe just east of the big city; it will be not far from the coast, yet close to the mountains; probably near a BART station or the 101 freeway… It’s usually about this time that fans of real estate like to paraphrase early 20th century political satirist Will Rogers who said, “Buy land, ’cause God ain’t makin’ anymore”, and to this, I proudly admit, I am no exception.