Top 3 Reasons California Real Estate is Worth it
Despite being one of the most expensive states in the USA, real estate investors vouch for California’s capability to generate consistent returns. Here are the top three reasons why:
The California Association of Realtors (CAR) expects home prices to go up by 5.2% in 2023. In its report, CAR has indicated that housing affordability may go down by 23% next year, making room for large real estate investment appreciation over the next few years.
- Rental Returns
With the constant inflow of population post-COVID-19, it is apparent that there will be a high demand for rental properties in 2023. As of August 2022, California rental rates have gone up by more than 22%. This is reflective of the high demand for rental properties in California. With the increase in rental prices, investors should take this opportunity to gain high returns on their investments in the long run.
- Low Taxes and Proposition 13
California offers some of the lowest property taxes in the US. Proposition 13 limits the property tax to just 1% of your property’s total market value and is subject to a maximum 2% increase every year.
Property tax rates and controls play an important role in ensuring large returns, attracting more and more investors from across the globe year after year.
Is California worth it? Yes, it definitely is. All the statistics and reports indicate that California is one of the most promising real estate markets to invest your money in.
With a solid history and understanding of real estate appreciation in California, let’s have a quick look at the housing outlook before you decide on taking the big plunge.
California Housing Outlook
California housing market is looking upward and onward. Median home prices are rising, and rentals prices are as well. After a rough patch of COVID-19, the California market is regaining its glory slowly and steadily. Over the last ten years, real estate has appreciated by 78%, with an average annual rate of 9.23%. This is an even more impressive average rate because it includes the abnormal market downturn between 2019-2020 due to the pandemic.
With offices and colleges reopening, demands for rental properties are constantly increasing, making a strong case for investors to buy property in California. As of today, California renters occupy 45.9% of the total home market.
Tourism is also gaining momentum. Inbound travel spending has been growing rapidly since early 2022 and is expected to reach the $16.4 billion mark in 2023. The tourism trends indicate that the market is ripe for investors to buy vacation homes to generate good returns.
If you are interested in learning more about investing in California, consult free-of-charge with one of our expert advisors.