California Housing Bubble – John McQuilkin – Beverly Hills

Home / Latest News / California Housing Bubble – John McQuilkin – Beverly Hills

California Housing Bubble – John McQuilkin – Beverly Hills

California Housing Bubble

Is California heading for another housing bubble?  If you look at places like San Francisco it certainly appears to indicate a looming bubble. In fact all across California prices are one again soaring out of control which would seem to indicate a potential California housing bubble. As a Beverly Hills real estate agent I see the signs of a looming California housing bubble not only in the higher end of inventory available but also all across the city from places like Watts to Pacoima. Buyers often tell me that something is out of whack when they can’t even qualify for homes in areas which traditionally experience higher crime rates.

The State of the Market

“Home prices continue to improve, but at a more moderate rate compared with the previous year,” California Association of Realtors president Chris Kutzkey said, noting one exception: The San Francisco Bay Area has seen home prices swing up at or near double-digit rates. Could this be an indication of a California housing bubble developing and rather rapidly?

San Francisco Housing Bubble

The June median price for an existing home or condo in the San Francisco Bay Area was $833,330, surpassing the May 2007 peak of $821,539, according to the state trade association report. According to these figures the Bay Area has already surpassed the previous California housing bubble.

Los Angeles Housing Bubble

The June median rose to $447,180 in the Los Angeles metropolitan area, and $469,030 for Los Angeles County as a whole. The June median was $716,730 in Orange County, up from $696,680 in June 2014, and $569,530 in San Diego County, up from $531,350 one year earlier.

According to the Chief

Leslie Appleton-Young, chief economist for California Association of Realtors, said June sales and price activity has helped trump a lackluster first quarter. “Overall, market fundamentals appear strong,” she said, with the only potential spoiler being housing supply.

If inventory constraints continue, housing supply could have an adverse effect on market conditions, she said.

California Housing Bubble? – What Should I Do?

Should I buy a house in California at this time?  Should I sell a house in California at this time? Are we in a California Housing Bubble? As a Realtor I get asked that a lot. I always tell me clients if you think home prices are going to continue to soar think again! If you need to sell or want to sell, sell now. It’s a great time to take advantage of the huge price appreciations. If you want to buy a home as a personal residence and don’t plan on flipping the home then yes go for it. As long as you stay in the house at least seven years you should be alright.

Flipping Houses During a California Housing Bubble

Flipping is Dead! For the most part the Investors have left the building. Flipping houses is not as easy as it seems on TV. When investors leave the market it’s often a sign that profits have reached their peek. The California housing bubble may already be fully inflated. You may be able to purchase and hold the property and flip at a later time but don’t envision making huge profits on a quick flip. Rent out the home and enjoy the rental income and plan on keeping it for at least seven to ten years.

But We Still Haven’t Reached Pre-Great Recession Prices

I hear this all the time. How can California be in a housing bubble if we still haven’t reach pre-great recession prices? Easy, those pre-recession pre-California housing bubble prices were artificially high. They were never meant to be that high and won’t be that high again for decades. Think about this… does it make sense for a newly married couple to purchase a home in a high crime area for $500,000? That is exactly what was happening at the height of the real estate boom or last California housing bubble.  I was seeing couples taking on $4,000 a month mortgage payments to live in areas that they themselves didn’t feel safe in. I walked away from many deals, counseling home buyers to wait and think it through before submitting an offer on such properties, often to no avail. They thought they knew best and felt five years down the road those same homes would be worth in excess of $1,000,000. After all they aren’t making any more land and everyone wants to live in Southern California!

John McQuilkin is a real estate agent at Rodeo Realty in Beverly Hills, California.

http://BeverlyHillsBestHomes.com

http://Twitter.com/RealEstateHunk

http://Facebook.com/CelebrityRealEstateAgentJohnMcQuilkin

 

Leave a Comment

Contact Me

Have a question or comment? Send me an email and I'll get back to you, asap.

Not readable? Change text. captcha txt