After experiencing a red hot streak, the California real-estates market has finally slowed down. Unfortunately, the reduction in home price means that many sellers have lowered the price on their homes by as much as 40% in an attempt to get out from underneath their property.
Less Desirable
In one startling example, a home in Oakland, California, not far from the tech-hub San Francisco, experienced a depreciation of almost one and a half million dollars.
Newsweek reported that the home in the Bay Area dropped from $4.1 million in March of 2022 to $2.55 million currently.
Efforts To Reduce Prices
Despite significant reduction in the $1.5 million home, it has sat on the market with very little interest.
Matt Castillo, a local real estate agent, noted that the house has been for sale for more than 60 days despite the significant cut in price.
Interest Rates
Like many other areas across the nation, California has felt the burn of interest rate increases over the past year.
With lenders increasing the average mortgage to 6% or 7% interest, many buyers just can’t afford to participate in this market.
Property Tax Rates
Another significant bill for homeowners that has significantly changed the ability for people to afford their homes, is property taxes.
In this last year alone, the average property tax bill has skyrocketed 125.3%. The average bill in 2022 was $26,319. Today, that bill sits at a shocking $59,307.
Going Out Of Business
California ranks third in the United States for having the highest number of realtors. They are just behind Florida and Texas: two states that have the same real estate craze.
However, due to the significant reduction in home buyers over the past year, many agents have been forced to resign from their practices.
The Tech Sector
While many tech companies used to thrice in San Francisco and the Bay Area, many have fled the state or closed their doors indefinitely.
Companies have also seen impact from A.I programs.
How The Housing Crisis Affects Sales
Amid a significant housing shortage around the entire United States, homes are still selling, even when the cost of the home remains unaffordable.
People seem to relocate to where they can afford to live, and what they can afford to buy. This ultimately means that many locals will be priced out of living in California.
Historically High Housing Prices
Despite recent changes in property ownership slowing down the market and resulting in some owners taking a loss, the state still has historically high housing prices.
During an average year, the home price in California still rises about 5.6%.
Affordable Housing
In many other states the priority of building affordable homes for families is at the top of the priority list, yet California doesn’t seem to share the same sentiment.
They plan on building only 106,000 new homes in the coming year. However this number still isn’t enough to keep up with the growing population.
Bounce Back In The Market In 2024
While the initial slump created a lot of fear for homeowners in the first half of the year, the rest of 2024 is supposed to look different.
The small amount of inventory will be the driving force keeping the market competitive.
Best Time To Buy
For anyone that is in the financial situation to buy a home in sunny CA, now would be the time to do so.
As housing prices are being reduced daily, sellers will become more and more desperate to get their properties sold.
