State of So Cal Real Estate

To sum up — rising values

1 – If you’re planning to buy a home, do it now, because prices are going up for the next few years. 

2 -Investments in single-family rental properties have weak potential because of high home prices. 

3 – Apartment developments have the best potential in LA County.

The LA economy is different than it was. In the last twenty years it’s lost a half million manufacturing jobs, many in the aircraft business. Tourism picked up some of the slack but at lower pay, and many jobs now revolve around services. Healthcare is the fastest growing industry. The demographics are different too; 48 percent of residents in LA County are Latino, 14 percent Asian, a third are immigrants.

The population isn’t growing very fast, but home prices are – that’s partly because LA is running out of room. Growth is mainly in the cheaper, outer communities in Riverside and San Bernardino. Home prices were up 30 percent in the last three years – although it’s difficult to separate real home sales from the boom in foreclosed subprime properties. Whatever the cause, you can expect prices to go higher in the next few years, so don’t wait if you plan to buy.

In LA County, prices are up the most in West Hollywood, the least in Torrance.

Home prices are high compared to rents, which makes single-family rentals a difficult investment except in special circumstances. Overall, high home prices force the majority of people to rent, and rents are high compared to incomes. This makes apartment buildings a good investment – LA County, with the highest percent of renters, has the best investment potential.Hm Calculate

Mortgages are a difficult investment right now. Lenders will likely back away from high loan-to-value mortgages during this period. The same is true for construction loans; new projects will be financed in very careful stages.

The area is growing at an unequal pace – partly because of housing costs – with faster growth in Riverside and San Bernardino Counties, slower growth in Ventura and LA.

The climate for investments in retail businesses is best in Riverside County, worst in LA and Orange – where demand hasn’t budged in the past two years and the market is over-served. doc

All counties will be adding healthcare jobs.

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