The California housing market will stagnate in 2016: Affordability, Millennials, and slow down in overall economy.
ByThe California housing market ended 2015 just like the stock market. Losing momentum and looking overpriced. In California a runoff of tech wealth has flooded into areas like San Francisco driving prices into the stratosphere. People now seem to feel that real estate is untouchable and that the Fed somehow cares about some crap shack in SoCal. The Fed has bigger fish to fry. Foreign money has pushed prices up in certain cities but this money can be fickle. Will this money continue to flow in? The housing market in California looks due for a correction simply based on underlying fundamentals. Most of the arguments for prices remaining high across the region seem myopically focused on the notion that foreigners and investors are somehow dumb when valuing assets. I’ve spoken with a handful of investors, both local and from abroad and they are keenly focused on value. There are a few challenges facing the California housing market and it is safe to say that things will limp along into 2016.
Housing in 2016
It is interesting to hear predictions on housing especially in 2015. Most of the housing bulls seem certain that “others” will continue to buy even though they themselves are not buying. If housing were such a sure bet from here on out, why not plunk down some cash and buy? In California buying for cash flow is a losing proposition. But over the last few years people bought to flip or to speculate on additional appreciation. That has been the play for hot money. But with price gains hitting a wall, will this continue? Also, a 20 percent down payment on a crap shack can be $140,000 to $200,000 depending on the area you are looking at and this doesn’t count the 30 year giant monthly nut…
