Homeowners in California and around the country are often reluctant to place their properties on the market because they fear that they will be unable to find a suitable replacement home. This is one of the findings of an annual survey of real estate agents conducted by a leading industry brokerage firm. Agents say that a shortage of new construction and increasingly reluctant sellers have made 2016 an excellent time to put a home on the market but not a very good time to buy one.
The nation's commercial real estate market has seen six straight years of solid growth thanks largely to robust demand in states like California, New York and Illinois, but many industry experts are predicting that 2016 will be a far more challenging year. Demand for commercial property has been falling in recent months as economic growth has slowed, and these factors combined with a construction boom in cities like Los Angeles, New York and Chicago has created a glut of vacant office space, retail stores and warehouses.
These days, institutional investors in California and around the country are holding a large portion of their portfolios in commercial real estate. Commercial properties can make excellent investments as they can generate income while they are being held and then be sold after they have appreciated in value. Until recently, it was relatively difficult for individual investors to invest in these types of projects, however.
The connection between the strength of the U.S. economy and the strength of the commercial real estate market is one that seasoned owners of warehouses, office buildings and other commercial property in California may have understood, but they are now being forced to confront the many problems connected with an economic slowdown. One problem of major concern is a change in the lending practices of banks and other lenders with regard to commercial property.
Because of the high cost of homes and rental properties, many may not be able to afford living in California. In fact, when California's housing market sales increased during 2015, approximately 625,000 California residents left the state, even amidst the state's increase in minimum wage and supposed job growth.
The high demand for commercial real estate in California and throughout the U.S. has been due, at least in part, to interest from foreign investors and high rental incomes. Of course, the strength of commercial real estate depends upon the ability of buyers to obtain the financing they need to complete the transaction, and this is where problems might be lurking around just around the corner.
Traditionally, real estate is not one of the most tech-savvy industries. However, a new trend may change that. Increasingly, virtual reality is being used to introduce potential buyers in California and around the country to new spaces while those spaces are still in development.