Yes, yes the real estate market is turning. Sales are up, distressed properties are down; the economy is getting better with an improving jobs picture and interest rates are crazy low. Never before has there been such a confluence of favorable rates and prices. It’s no mystery as to why the housing market is on the mend.
Sure there are places where development went crazy and under qualified buyers fueled a speculative marketplace. The hangover of that punch is still being felt in swaths of unoccupied, bank owned neighborhoods throughout inland California. Still, those areas are not necessarily representative of the situation in most of California. I once had a postman tell me “The most expensive neighborhoods don’t have straight streets,” meaning the hills are where the money is. Don’t believe me? Try buying in Silicon Valley in the hills of Cities like Palo Alto, Los Altos… Hillsborough. Then of course there’s always Pacific Palisades, Beverly Hills; Rolling Hills. California has lots of hills.
We know that supply and demand is the basic tenet of price determination. We also know that California is largely built out, at least in those hills and beach areas and large city areas. Not many subdivisions being built in San Francisco… nor are there in Los Angeles City. I just read that Pebble Beach was just approved to build 90 homes as well as add a couple hundred hotel rooms – it only cost them 685 acres of permanent and protected open space. The Sierra Club and the California Coastal Commission had a little something to do with that. You get the idea; California is home to the most employers; the greatest growth (think Facebook); the largest ports for imports from places like China, Japan, Viet Nam. Heck it’s the only state with 4 basketball teams, 3 football teams, 3 hockey and 5 Major League baseball teams. For all of these reasons we can understand why people want to live here. Oh yeah, and the weather isn’t bad either.
This morning, the Los Angeles Times reported data from the latest census that showed the last decade had the highest level of immigrant growth in the U.S. population since the 1920’s. Of that growth 25% came to California. Of course some of that growth was in the form of low wage earners in pursuit of the American Dream. But a greater portion was almost certainly an upper echelon of thinkers and doers here for the education and the unique entrepreneurial opportunities that California offers. California remains the largest recipient of venture capital, as an aggregate amount, of any state in the Union. Think it and they shall come. Funny thing about all this is that all these folks coming to the Golden State need a roof to live under. But construction remains anemic. If demand increases and supply doesn’t respond by increasing, a shortage is created. When there is a shortage, prices go up. Sure there are still budget problems in Sacramento and unemployment for many is still a fact of life. None the less, one can’t help but believe brighter days are ahead, happy days are here again and if you want to ride that train you better get on board ‘cause it’s leaving the station. That means if you don’t yet own a home, you’ll want to buy one just as soon as you can because as fast as prices came down, they can go back up again. After all, there’s gold in them thar hills, and I’m not talking about the shiny stuff either.