California Housing Market Still Strong

November 22, 2006 No Comments »

While many cities throughout the United States deal with bubble trouble, California has managed to hang onto a good chunk of its housing gains from the last few years, with year-to-year gains in many of the largest markets.

Many high-growth areas such as Phoenix, Boston, and much of Florida continue to see huge home price declines from a year ago, but many markets in California, such as Los Angeles County, San Francisco, and the Inland Empire, have managed to chalk up year-over-year value gains.

Much of the strength in California is attributed to the lack of available land for development, and strict regulatory restrictions that have kept new home building at bay.

A strong economy with plenty of available jobs has allowed homeowners to keep up with their mortgage payments, and fuel sales at all price levels, including the over $2 million market, which has seen 4%+ gains in house values from a year earlier.

While the data may come as a surprise, growth has still slowed relative to recent years, and certain markets in California have posted year-over-year losses in house value. These include once-red-hot San Diego and Orange County, who posted 2.1% and 0.8% losses in value, respectively.

Many believe that California was first to boom, and also the first to come down from its all-time peak, which may explain why it’s coping with the burst a lot better than other hot markets.

But perhaps California is a unique market with strength other housing markets will never possess, regardless of how hot or cold the real estate market is.

And while California homeowners continue to get lucky, the day might come when things aren’t so peachy. What’s that old saying? The bigger they are, the harder they fall? If that turns out to be true, the Golden State might not be so golden.

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