Southern California Home Prices Rising

Southern CA has always been a desirable market for home buyers. It’s no surprise, then, that Southern California home prices are on the rise. Here’s a look at what’s fueling the current surge in prices and what this means for real estate investors.

Supply Less Than Demand

Demand is pretty high for homes right now as buyers look to lock in interest rates before they rise later this year. Buyers also want to take advantage of improving market conditions and perhaps earn equity more quickly than normal. Unfortunately, the supply of listings on the market is low. It simply is far lower than the amount of demand.

Bidding Wars

So, what happens when there are far more buyers than there are home available? Bidding wars are becoming prevalent. Buyers competing for listings naturally drive up the selling price of homes. With each home that buyers lose bids on, they tend to creep up higher and higher in price on future offers,…desperate to finally win out and get into a home quickly. This sense of urgency also causes buyers to act more quickly when homes enter the market.

Increased Home Prices

Home prices within the six counties of Southern California recently saw its biggest increase in over a year. The median price for single family homes increased by 7% in just one month (from January to February of this year), according to CoreLogic. That’s more than we sometimes see in a whole year! In fact, prices have been steadily rising each month for the past few years.

Impact of Southern California Home Prices on Investors

Fortunately for investors, bidding wars don’t necessarily impact the prices of homes that they would purchase. Typical home buyers look for properties that are move-in ready, whereas investors target homes requiring extensive rehabilitation. So, there’s not often direct competition with those buyers. Once homes are purchased, rehabilitated, and marketed for resale, investors benefit from the surging Southern California home prices. Returns are maximized by ever-improving market conditions. These market conditions present a great opportunity for investors to maximize their earnings and reach goals within shortened timeframes.

If you’d like to participate in the Southern California real estate market, take a look at our investment partnerships. They allow you to invest without getting bogged down by day-to-day real estate operations. It makes investing in real estate easy and straight forward.