Do you believe that your community is the place where people are least likely to afford home ownership?
If you are correct in that belief, you live in California.
California has a high birth rate, and also attracts foreign immigrants. Although many Californians have left for neighboring states, it still is growing in population. But housing growth is not keeping up with the demand.
In many areas, California is already “built up” and land is scarce. In others, Proposition 13, the measure that was to limit property taxes and help homeowners, has led for local governments to prefer developing land for retail and commercial use, rather than residential. Since supply of housing does not keep up with demand, the prices are driven up. Even as people move inland, away from coastal and vacation areas, closer to where they work, the pressure on housing prices in California continues.
In much of California, mortgage payments are over 50% of the household income. This is often cited as an indicator of a bubble. Home ownership is made more possible with interest only loans, and adjustable rates. However, despite fears of a bubble, the price of housing still continues to climb in much of California. Interest rates have recently risen, and there is less of the speculation that drove the market, so prices have slowed, but they are still appreciating in many areas. Since housing prices were slow in the 1990s much of the recent gains can be seen as a “catch up”. Job gains have also been made throughout the region, indicating a strong economy. As long as there is a demand for housing by people who can qualify for mortgages and have jobs, many experts do not see a price decline in the near future. The pressure that could lower housing prices includes a loss of jobs and a major rise in interest rates.
California is one of the nicest places to live in the United States – if you own property there, enjoy the gains you have made! If you are looking to purchase a home there, be very sure that you understand what you are buying and that it is the right home for you! You could live less expensively elsewhere – but you wouldn’t be in California! While California has a rate of home ownership 10% below the national average, more people have been buying homes in recent years, despite the rise in prices.