Are you are planning to sell your property in California, USA in 2016? Well, read on then, for we tell you just what to expect from the California property market in 2016.
The biggest impact on the housing market will be made by two entirely different sections of the population – the Baby Boomers and the Millennials.
Baby Boomers have been in California for decades now and are not moving anywhere. Millennials on the other hand, are leaving California. California is no longer the coolest place in the U.S. and there are many cities where Millennials can get better jobs and more affordable accommodations.
The problem with buying property in California is that it’s more expensive than ever before. There is a serious shortfall in the supply of new homes and apartments, especially in cities like Los Angeles. This has led to a surge in home prices, as you would expect.
It is very difficult to buy a home here because sellers expect all-cash offers and there are bidding wars on almost every great house or apartment that is up for sale – which drives up the prices even further.
But is there a bubble in the California housing market? Not so, according to UCLA economist William Yu, who believes that while California’s housing market is more expensive than before, it is not as yet a bubble. The reason for this is that the property prices in California are driven by the strong demand and limited supply, and not necessarily by speculative interest. So, the real estate market here continues to be strong and healthy as ever.
Economists also predict that Los Angeles in particular will experience a strong growth in its property market over the next four years. Now, 2016 is a politically turbulent year in the U.S. with the Presidential elections going on, and nobody really knows how that would affect the property market in California. But really, California has always been a safe place to buy a house and that is unlikely to change any time in the near future.
That brings us back to what we started with – Baby Boomers and Millennials and their impact on California real estate. Millennials, contrary to popular perception have a strong interest in having a home of their own. If they aren’t homeowners as yet, it is only because they cannot afford to. As things stand today, they are unlikely to able to buy a decent home or apartment in California today, unless they get some sort of a financial assistance from their parents.
Leslie Appleton-Young, chief economist for the California Association of Realtors has this interesting anecdote about young people looking to buy a home in California: “When we talk to people that are buying downtown and ask them, ‘Why would you buy in downtown L.A?’ They talk about short commutes. They talk about being where the action is. They talk about Staples (Center) and L.A. Live. You know what they don’t talk about? Schools. It’s the kid-thing. This is the ‘delayed adulthood’ -- partly because ‘I had to. I didn’t get a job.’ And partly because the baby-boomers are the most co-dependent parents that have ever existed.”
What about Baby Boomers? Ms. Appleton-Young says, “For the first time, we have not just a housing affordability problem for young households that want to start to move up the ladder, but for repeat buyers. And I think that’s very important for the value here, because so many people do want to come up here and get in ‘quote-unquote, get into an active retirement.’”
Certainly, this is an exciting time to be in California, if you can afford it.