CHANGING PATTERNS OF CALIFORNIA REAL ESTATE

California has one of the world’s largest and most diverse economies. Additionally, demographics in California are changing rapidly. These changing demographics affect the economy – specifically regarding business and land use for the coming years. Changes in age, ethnicity and income patterns can impact the development of projects, investment ventures and local real estate communities.

In California, the real estate investment market is in flux, creating opportunities for the swift real estate investors. While the traditional residential real estate market is in doldrums, there are sectors that will double and perhaps quadruple in the next ten years. Smart investors are taking advantage of the real estate market and accumulating properties in promising sectors. Real estate always poses a challenging aspect of investment. Smart investors have a substantial portion of their portfolios in real estate.

Residential real estate may fall in price rapidly because of two reasons.



The huge number of properties owned by individual families calls for lower valuation during stagflation or deflation.



The number of homes for sale, out numbers the number of buyers who want to buy them.



The property taxes are escalating.





If the budget deficit is out of control; there is always a tendency for property taxes to rise.

The farmlands currently present tremendous opportunities. These lands enjoy lower property taxes. The debt on these holdings is far less. It is time to accumulate farmlands and adjoining properties.

The year 2007 in California has been a year of change. Property sales volume is down, while in some areas (Los Angeles County) prices continue to climb.

Loan products are starting to disappear. Many mainstream lenders are tightening there standards for the 100% loan programs. Some lenders are eliminating low or Zero down payment programs all together.

Real Estate Agents too have thinned out in the market, as the sales volume decreases. There is a tendency towards Brokerage merging.

Now buyers and sellers are redefining the real estate dance, if you will. According to the National Association of Realtors (2006 Annual Survey) 80% of home buyers started their home search online. Despite the consumer’s choice to seek out initial information online, buyers and sellers still employ the services of real estate professionals, to execute transactional details and complete the process.

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If there is any positive aspect to the foreclosure crisis that has gripped the U.S. in the past few years, it is that anyone interested in investing in real estate should be able to find appropriate properties at bargain basement prices.  Homes can be purchased from banks at far less than their actual value, and business properties are also as affordable.  And a very good reason to consider investing in south Texas real estate is because this area is one of the few in the country that is expecting steady population growth over the next several years.

Affordable Residential Real Estate

Unlike other areas of the country that have experienced such a population growth, south Texas real estate has not seen the median price of their residential homes skyrocket in proportion to that growth.  This raise in median home prices was seen in California, Florida, and other areas of job growth but has not been seen in areas of Texas.  This means that real estate is very affordable and ripe for investment dollars.

Qualified Buyers

In some areas of the country, there are affordable homes and jobs but this doesn’t mean that those jobs are paying enough for people to buy those homes.  When it comes to south Texas real estate, this just isn’t the case.  According to the Texas Housing Affordability Index, a Texas family earning the statewide median income has 152% of the income required to qualify for financing on the median-priced home. Nationally, families have about 16% more than what is required.  Nationally a median home value is 3.62 times the median household income, but in Texas, the median value is only 2.52.  This means that not only is there affordable housing in south Texas real estate but plenty of customers that can easily afford those homes as well.

Other Jobs on the Way

When an area of the country experiences a population growth, this means that there is a resultant strain on the area’s infrastructure and resources, but there are tax dollars to correct this.  This means jobs are then created to build and repair infrastructure and increase those resources.  This means that as the real estate becomes more valuable, more support is needed and then created, which means more jobs and more valuable real estate created.

Some people purchase a vacation home now, intending to move there after retirement but you should remember that your life and your circumstances may be very different when you reach retirement age.  When you’re at retirement age, your knees may not appreciate being in a “winter wonderland” when you have arthritis and poor circulation.  In order to make your vacation home a proper investment for your retirement years, you need to be practical and realistic.  Weather will be a major factor for you to consider when you reach retirement age.  Purchasing a vacation home for your enjoyment now can be a great investment for families who are looking forward to a permanent residence upon retirement.

Anyone considering an investment in real estate should consider south Texas.  The jobs and economy are headed there, the weather is beautiful, and everything is booming.  While no one wants to make light of the housing crisis that’s affecting so many millions, this does mean that there are opportunities for others who want to park their investment dollars in a sure bet.  And south Texas may be just the place they’re looking for!