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.
For example, even many of California's median-type homes average more than $400,000, while rentals cost over $2,000, which is almost $1,000 higher than the national rentals average. Because there are not enough rentals to meet the demand, and the fact that many people living in the state are unable to pay for a home, it is likely these numbers will continue to rise.
In addition, there is a short supply of housing in California. At the end of 2015, the amount of homes for sale in California was the lowest in 22 years. In fact, from 2005 to 2015, there were permits filed for just 22 housing units per 100 new residents. As a result, those selling their homes will reap the benefit from an increased amount of potential buyers who have fewer choices.
According to predictions by Chapman University, single-family home prices are expected to rise by 2.5 percent, and Cal State Fullerton projects that they will rise by five percent. This may cause people to continue leaving the state to find a place to live, while out-of-state investors purchase real estate. However, mortgage rates may level off because of the increased stock market volatility and the global economic slowdown.
Those who plan to make a residential real estate purchase in California might wish to seek the advice of a law firm experienced in real estate law. An attorney might be able to help gather all the legal paperwork, arranging the terms of a contract and helping to settle title issues.
Source: Housing Predictor, "2016 California Housing Market Predictions", March 11, 2016