Real Estate in California

The real estate industry in California is in its lowest level as of today. The reduction of price is widely attributed to the global recession that struck the world from the year 2007. Before the global recession, real estate industry in California was at its highest peak. Residential houses could be bought at a price of $ 1 million. This amount of money is very hard to find in the present time. Many people have refocused their priorities onto basic needs than investment. People hardly get enough food to eat! Investment is consequently very far away from them as at now. This means that it will take a long time for the prices of houses to stabilize. Buying a home or a house at this time has two implications. A long term investor can enjoy the low prices today with an aim of capitalizing on future price increments. This move is however speculative and could crush down if prices fail to rise to higher levels. A short term buyer could however lose greatly due to lack of an active market to dispose the property for huge profit margins.

The real estate industry has had a lot of shakeup in the past four years. The shakeup made the industry so volatile and unpredictable. The government had to come in at some point to help provide incentives to buyers so that the industry could be revived. These incentives have been eliminated at the moment. This means that very few people will be buying the houses at this time. I recommend that buying a house at this point will not be a viable investment. Home owners are at this time working so hard to recover the moneys that they spent in the constructions. Such money recoveries always make sellers inflate the prices. This means that a person can buy a house at a high rate only to lose the value with the sobbing prices.

I disapprove any move to buy a house at this time. The volatility in price sweeps across the board. The residential and the commercial real estate are affected alike. The present home owners have more loans than what their properties stand at. This harsh feeling makes investment in this sector an idea that should not be encouraged. California was a very stable market until 2007 when the global recession struck America. Many people lost jobs resulting into great financial crisis. Just before the recession, property prices were soaring high in California. Land owners must have sold their pieces at very high rates. These high land rates equally translated into high costs of property development. Consequently, most houses in California cost very high. Any buyer must be ready to pay huge sums of moneys to offset all the costs incurred in the expensive buildings. However, there is no guarantee that the prices will get high any time soon.

Some economists however have a more optimistic point of view. According to them, the tough economic times can be a good opportunity for an investor. The prices of items are normally low due to little demand in the tough economic times. Investors can therefore take advantage of the low prices to buy property that they would sell in later days when the prices will have gone high. Even though this theory is good and worth trying, there is no guarantee that the prices will go up again. The government has also eliminated the incentive program that was initiated soon after the recession hit America. This means that the motivation to buy houses has further been curtailed. I highly disapprove investment in the real estate industry at the moment.