California real estate represents some of the most extraordinary and expensive real estate in the nation. It also represents some of the most talked about. This year, there was no shortage of interesting topics, incredible data, or exceptional homes to talk about. From affordability discussions to homebuying trends to “best of” lists, California was all over the headlines this year. Here are a few that made an impact.
If there was any doubt as to whether California is cool, Forbes did away with it. Its list of America’s Coolest Cities includes “a whopping eight Golden State metro areas” including San Francisco (No. 5); San Diego (No. 6); Riverside (No. 8); Oakland (No. 12); Sacramento (No. 14); Los Angeles and San Jose (tied for No. 16); and Santa Ana (No. 20).
L.A.’s Ritz-Carlton Residences named one of the hottest real estate spots in the world
Now is the time for high net worth New Yorkers to invest in prime properties around the world, according to the New York Post. Why is this important to California? Because alongside London’s One Hyde Park, Antigua’s Rosewood Jumby Bay, Argentina’s Patagonia, and a host of other amazing properties, the publication earmarked L.A.’s Ritz-Carlton Residences at L.A. Live as one of the “hottest real estate spots in the world.” The Post also like Ocean Avenue South, “the first major mixed-use project Santa Monica has seen in 25 years.
Los Altos is the most expensive market in the country
The home of some of the country’s most significant technology companies is also home to the most expensive homes in the nation. According to Coldwell Bankers’ Home Listing Report, “The average four-bedroom, two-bath home in Los Altos costs $1,963,100—about 30 time the average cost of a home in Cleveland, the country’s most affordable market,” said CNBC.
California nearly had a lock on the top 10 most expensive markets, with all but one city in the golden state:
- Los Altos
- Newport Beach
- Redwood City/Woodside
- Los Gatos
- San Francisco
- San Mateo
- Wellesley (MA)
Coastal Prices Expected to Rise Further
“Along the California coast, it’s not merely challenging to find reasonably priced real estate—it’s nearly impossible,” said Forbes.
And that only looks to get worse in 2015 (or better, if you’re selling) as a “confluence of factors,” including the constrictions of Prop 13, a lack of available land, and “foreign buyers inflating prices” pushing coastal prices up even further this year.
Just kidding—California really is affordable
Despite widespread notions to the contrary, California is affordable—at least according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). “Lower interest rates and minimal home price gains kept California’s housing affordability in check in the third quarter of 2014 and even helped improve affordability in some high-cost counties in the San Francisco Bay region,” they said.
Thirty percent of home buyers could afford to buy a “median-priced, existing single-family home in California in third-quarter 2014”—the same percentage as previous quarter but “down from a revised 32 percent in third-quarter 2013, according to C.A.R.’s Traditional Housing Affordability Index (HAI).”
Key points from the report include
- Declining affordability in 10 regions, including Santa Barbara, Los Angeles, and Napa counties
- The greatest increase in affordability in Santa Clara, San Francisco, and Alameda counties
- Santa Barbara, San Francisco, San Mateo, and Marin were the least affordable areas in California in the third quarter, “however, these three Bay Area counties saw a slight improvement in housing affordability from second-quarter 2014,” said C.A.R.
California 2015 Market Forecast
The C.A.R. also released its market forecast for the year, and the predictions are: a slight increase in home sales and prices. However, they caution that the price gain will be the slowest in four years.
“With more available homes on the market for sale, California’s housing market will see fewer investors and a return to traditional home buyers as home sales rise modestly and prices flatten out in 2015,” they said.
The forecast is for “an increase in existing home sales of 5.8 percent next year to reach 402,500 units, up from the projected 2014 sales figure of 380,500 homes sold. Sales in 2014 will be down 8.2 percent from the 414,300 existing, single-family homes sold in 2013.”
The C.A.R. projects the state’s median home price to increase 5.2 percent to $478,700 in 2015.
Arcadia the latest California city to enjoy foreign investment windfall
Foreign investment in California real estate is nothing new, but where and how it’s happening might be. Forbes was predicting an influx of Chinese money in 2013, and “the Chinese surpassed Canadians as the top investors in American residential real estate” in 2014, according to Housingwire.
“According to the National Association of Realtors, during the 12-month period that ended in March, investors from China (Mainland China, Taiwan and Hong Kong combined) invested $22 billion in the U.S. housing market. Canadians, the perennial leader in foreign investment, spent about $13.8 billion.”
The latest California city to see this is the L.A. suburb of Arcadia, “a hotbed of the buying binge,” said Businessweek.
Thanks to a booming market largely comprised of Chinese millionaires snapping up homes in all-cash purchases, “Arcadia is on track to bring in record revenue this year. In the fiscal year ended in June, fees from building permits and development reached $7.9 million, a 72 percent increase from the previous year.”