Is California Signaling Another Real Estate Crash?

The American dream generally includes the person having the ability to buy a home. For people looking to chase their own American dream, they may be curious about how and when to buy. For years, California has been the place to look for predictions about the real estate market because it is so large.

California is a beautiful state with a lot to offer from its state parks to its architecture and design. People have been flocking to there since the Gold Rush, but now, the hype seems to be dying down according to the real estate market. Being such an influential state, it has the ability to predict trends. With the real estate market slowing down in such a prime location, can we expect to see a similar pattern in the rest of the country?

There are a lot of reasons that people flock to the area. It has beautiful weather, Hollywood, and it's the most important area when it comes to the newest technology. It's a great place for families and business. Plus, you are close to vacation destinations at all times. So why does it appear that less houses have been sold?

There is a decrease in the amount of houses being sold in the Golden State. In six Southern counties, 22,706 houses were sold- a 15% decrease since 1988. By the laws of supply and demand, this can help increase the cost of houses. In Ventura County, sales dropped 19.8%. In Orange County, sales dropped 8.5%. Houses in the area are especially expensive, and prices keep growing. In fact, prices are up 7.3% from last year.

This makes the median price of houses in Los Angeles $739,000. Being such an expensive area, the price increase might not be the best thing for buyers. This means that sales may continue to decline. This makes the state a unique area, and real estate trends in California are not necessarily indicative of what the market will look like in the future for the rest of the country. Being the trendsetting state that it is, it's not a bad idea to pay attention, though.

Countrywide, there was a decrease in the number of homes sold in April and May of 2018. This was a result of a lack of homes, though. This wasn't the result of a lack of buyers. There has been a total of 35 months in a row with less homes for sale. The problem may be that most people can't afford the homes that are available.

One thing that many Realtors have discovered is that less people are willing to participate in bidding, preventing prices from going up even higher. This is especially true for houses over the $2 million mark. While this may stop prices from growing, it can stop a sale from happening from the start if people don't want to negotiate. Haggling isn't as popular as it used to be. In today's fast-paced world, many people don't want to spend the time on negotiations with a real estate agent, especially for such a large purchase.

Another reason that many people might be more hesitant to buy is because of the interest rates with mortgages today. The average rate is 4.52% compared to 3.96% last year. The rates don't seem to be going down, either. The rate is supposed to reach at average of 5% in 2019. The higher the interest rate, the more that it will cost the homeowner to pay for the house in total. This may strongly discourage potential buyers from becoming homeowners.

Less houses available and higher prices doesn't mean that there will be a crash, but it might make less expensive areas like Texas, Georgia, and North Carolina more popular. Trends show that while California used to be one of the most popular states in the country for people to move to, other states are moving up in the ranks. Not every place has such dramatic increase in the cost of houses.

Buying a house is an exciting and stressful experience. Learn what you can about the market so that you make the best decisions possible! With prices continuing to rise, this is the time to look for a deal before the houses are gone and prices go up even more. It's a great time to sell a home, but that doesn't mean you still can't find a great deal anywhere in the country!