The real estate industry in California has seen a lot of change over the past decade. This article will take a closer look at events that played a role in these changes and how they have affected homeowners and businesses in California.
The Housing Market Crash Of 2008
The housing market crash of 2008 was a significant event that affected the real estate industry in California and throughout the United States. This crash was caused by several factors, including the bursting of the housing bubble, the subprime mortgage crisis, and the liquidity crisis.
As a result of this crash, many homeowners lost their homes, businesses went bankrupt, and the unemployment rate increased.
Civil Engineer and President of CES4, Pedram Zohrevand, believes the industry underwent many changes in the years following the crash.
Stricter Lending Standards
After the housing bubble burst, lending standards became much stricter. Because of hundreds of thousands of foreclosures that were taking place in California and around the country, banks were no longer willing to lend money to people who were at risk of defaulting on their mortgages.
As a result, it became much harder for people to buy homes, and the number of home sales in California decreased significantly. After 2009, home sales in California decreased by nearly 60%, according to data from the California Association of Realtors.
The Rise Of Online Real Estate Listings
One of the most noteworthy changes in the real estate industry over the past decade has been the rise of online real estate listings, Pedram Zohrevand suggests, having a major impact on homeowners and businesses.
Online listings have made it much easier for homeowners to find information about homes for sale. They can search for properties in their area, compare prices, and view photos and videos of homes without having to visit a real estate office. Buying or selling a home became much easier and more convenient.
Because of this, the number of realtors in California has decreased significantly. The National Association of Realtors shows that between 2006 and 1016, the number of California realtors dropped from over 100,000 to under 60,000.
For businesses, online real estate listings have created a new way to reach potential customers. Real estate businesses can now advertise their properties online and attract a much wider audience. Zillow stated that in 2017, they had more than 160 million unique visitors to their site.
Zohrevand believes this has increased competition among real estate businesses, as they all fight for a share of the online market.
More Foreign Buyers In The Market
A foreign buyer is not a citizen or permanent resident of the United States. They can be a person or a company and buy property anywhere in the country. In California, most foreign buyers come from China, Canada, and Mexico.
Foreign buyers have played a substantial role in the real estate market in California over the past decade. They are often willing to pay cash for properties, which helps to drive up prices. In addition, they are usually looking for luxury homes, which further increases market costs.
According to the National Association of Realtors, foreign buyers accounted for $77 billion of all residential sales in the United States in 2016. Of that, $28 billion was in California: representing a 35% increase from 2015. It was the highest amount ever recorded.
Read more: Buy Before You Sell Program
Californians Moving To Other States
In recent years, a large exodus of Californians has moved to other states. Data from the U.S. Census Bureau shows more than 100,000 Californians moved to another state in 2016. This was the highest number of moves out of California recorded in a decade.
But why are they moving? Pedram Zohrevand believes there are several reasons. The high cost of living in California is one factor. Many people struggle to afford a place to live with the high cost of living and taxes.
In addition, many businesses are leaving because of the complicated regulatory environment. True to form, prices have begun to decline with the decrease in housing demand, leading to an increase in foreclosures and short sales.
Increased Regulation From State And Local Governments
Regulation from state and local governments has made it much harder for individuals to buy or sell a property in California. For example, the Homeowners Bill of Rights, passed in 2012, put additional restrictions on lenders and made it harder for them to foreclose on a property. As a result, many lenders have stopped lending money to people in California.
In addition, there are now a number of disclosure forms that must be filled out when buying or selling a property. These forms are designed to protect buyers and sellers but can also be confusing and time-consuming.
The Economic Recession
While the recession technically ended in 2009, many people still feel its effects. The unemployment rate in California is higher than the national average, according to the Bureau of Labor Statistics. In addition, the state has many people who are underemployed or working part-time jobs.
Final Thoughts
While the real estate industry has undergone many changes in the last decade, California remains one of the most desirable places to live. The state has a lot to offer, and people are still willing to pay a premium to live here.
However, it is important to be aware of the challenges that the industry faces and to be prepared for further changes in the future. If you’re considering buying or selling a home in California, work with an experienced real estate agent who can help you navigate the market. Where do you think is the best place to live in California?
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