If you would have invested in a San Francisco property five years ago and paid out in 2019, you would have made a profit of 50 percent, no matter the rental income. But if you had purchased it a year ago and sold it today, you would have made precisely zero. The California surge is over and investors need to turn to Plan B, which is the answer to the Jeopardy question: how do you cope with a market that will at best shift sideways?
Every real estate investor in the US knows that California's real estate market is one of the hardest to enter into. However, California is also considered to be one of the best states to invest in real estate in 2020 for both long-term and short-term rental investment. The Golden State real estate market has given wealth to investors for many years, and it still has great investment opportunities to come in 2020. All you need to do is know where to find them.
House prices have risen
When there are many prospective customers on the market, but there are not enough homes for sale, this naturally creates some strong competition which leads to an increase in home prices. As a result, when prices go up, this widens the affordability gap for first-time buyers and diminishes home sales. However, this should inspire you to buy a California rental property right now!
Growing house prices are a symbol of a healthy housing market and growing home values for years to come. Besides, while accessibility is a matter for first-time buyers, seasoned California real estate investors know how to find homes for sale that they can afford to buy and convert into highly-demanded rentals. Don't let tight availability and high prices deter you from finding an investment property in California.
Mortgage rates are still low
This is another reason to invest in California real estate. According to the California Association of Realtors, low mortgage rates will help California's housing market. Mortgage interest rates are likely to remain close to 3-year lows, giving California real estate investors the motivation and purchasing power they need to enter the housing market. California's demographics, and the incredibly low current demand for property investors, point to this return of "excitement" in the real estate sector over the period 2019-2021. Even then, the purchaser-occupied homeownership rate, which fell from 61% in 2006 to 54% in 2017, will continue to struggle. As a result, fewer brokers and agents would be required to service the purchase and selling of homes.
If mortgage rates continue to grow gradually over the long term, house prices will be placed under downward pressure. This will fit well for brokers and agents representing investors involved in the acquisition of income land.
The economic fundamentals remain strong
Despite high property prices, California is still one of the best states to invest in real estate because it is backed by a strong economy – the strongest in the country. California still provides and offers a variety of work opportunities, which inevitably contribute to employment growth.