One of the reasons that explain why housing prices in California soar, and also why very few people can afford to buy them, is that the construction of new homes does not reach the speed of the housing demand.
In 1986, California was ranked #7 in housing permits per-capita. In 2018, California was ranked #37. This situation creates a favorable situation for homeowners in California. Home prices go up and up. Today, the homeowners enjoy kind of a protected housing market, they still prefer to live on the family home even when the kids are already gone.
However, California Governor Gavin Newsom signed several laws this year that will allow new housing projects to reduce this economic gap.
Homeowners should think twice if it is convenient living in a big home delaying their decision of selling the family home and getting a small and more affordable unit for their retirement.
Homeowners should also remember that the family home is getting, irreversible, old and the maintenance costs will be higher and higher. Also, homeowners should remember that not all homes, nor neighborhoods get the same price increase. Some neighborhoods have better price increases than others.
If you consider it’s time to evaluate the best alternative action, meaning selling the home and getting a new small one, or just cashing out the equity for investing in a vacation home, please feel free to call or text me at (323) 942-9347 or (626) 712-6422.
Source: Bloomberg article: How California Became America’s Housing Market Nightmare