Los Angeles Real Estate

While the overwhelming majority of the United States is facing a housing bubble ready to burst, or if you live in some east coast cities, it already has, the state of California appears to be a world unto itself. How else can you explain the fact that while a legitimate housing recession appears ready to take hold elsewhere, in California, all is peaceful and profitable. Even with experts predicting an inevitable fall to the LA housing market at the beginning of 2007, numbers are still up in most sectors during the first quarter of this year. Will 2007 finally be the year we see the leveling off of the red hot California housing market or is this a rocket ride that isn’t going to end anytime soon?

According to a recent L.A. Times article evaluating the first quarter numbers, the real estate market in the City of Angels is a complicated patchwork depending on the type of home you’re looking for. Overall, March sales were down 4.6 percent over March of 2006, but if you are looking either for a palace that is worth millions, or an entry level home that is on the cheapest end of the spectrum, home sales are still showing amazing growth. It is the homes in between that seem to be faltering during the first part of 2007.

Statewide, things aren’t looking as promising. Some cities in California showed a drop of over 20 percent from last year, but the major cities like San Francisco, L.A. and San Diego are still performing well, albeit not as well as in previous years.

So, this leads to the natural question, will this recession last or is the allure of living in California too much to resist? The first thing you need to recognize is that California really can’t be compared to any other housing markets anywhere else in the country. While the housing downturn that has gripped the eastern US for the last few years has finally infiltrated California, you can bet that not only will it not hit the Golden State as hard as it did out east, but that California will recover faster and stronger than any other state in the union.
It is impossible to downplay the attraction of living in California for many people, and while home prices may seem to be out of reach for many families, California is a big enough state to have small towns that can accommodate young investors as well as low income families looking to live out the American dream.

That’s why experts are in near total agreement that while California may experience a short lived downturn in the housing market that could last the rest of 2007, it is a blip on the radar screen when it comes to the long term real estate health of Los Angeles and California over the next few decades. There are simply too many people looking to buy a home in LA and too many people tired of Ohio and New York winters who will move to California over the next 5-10-20 years to take a temporary downturn in the housing market as anything other than an anomaly.
There are very few “guaranteed” investments anymore, and this is especially true with real estate. But unless California breaks off the North American continent within the next few years, the housing market throughout the state will remain strong and a very smart investment for anyone looking to turn a profit.

How long should you avoid the California and Los Angeles housing market? Don’t expect the bottom to fall out, there is just too much demand for that to happen anytime soon. Expect no longer than a year slump, if that long, as soon as economic indicators show a recovery, you would be smart to dump everything you have because this slump is likely to be followed by another decade long climb.

Warmly,

Mary Wozny