San Francisco Is Becoming Less Desirable
In one shocking example, a home in Oakland, California, just outside of tech-hub San Francisco, experienced a depreciation of almost one and a half million dollars.
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As reported by Newsweek, a home in the Bay Area went from $4.1 million in March of 2022 to being sold for $2.55 million in present day.
Reductions in Some Places Aren’t Working
Although the beautiful home had a reduction of more than $1.5 million, it has still been sitting on the market without much interest.
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A real estate agent in the area, Matt Castillo, noted that the house has been on sale for more than 60 days despite the dramatic price cut.
Interest Rates Have Slowed Down Home Buying
As with many areas in the nation, California has felt the heat of the interest rate hikes over the past year.
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With lenders increasing the average mortgage to 6% or 7% interest, many new buyers simply can’t afford to enter the market.
Real Estate Agents Going out of Business
California has the third-highest number of realtors in the U.S. They sit just behind Florida and Texas: two states that also share the same real estate frenzy.
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Due to the dramatic reduction in home buyers in the past year, many agents have had to hang up their hats or close their practice altogether.
Property Tax Rates Are Also to Blame
Another common bill for homeowners has drastically changed the ability for many people to continue to afford their house: property taxes.
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In the past year alone, the average property tax bill has skyrocketed 125.3%. The average bill in 2022 was $26,319. Today, that bill sits at a staggering $59,307.
The Tech Sector Has Played Its Part in the Reduction
While many tech companies used to call San Francisco and the Bay Area home, many have left the state or shuttered their doors completely.
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Companies have also been affected by the rise of A.I programs. This tool has made many jobs in the tech space obsolete.
California’s Home Prices Are Still Historically High
While the recent changes in property ownership has slowed down the market and caused some home sellers to take a loss, the state still has record high prices on houses.
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During an average year, the home price in California still rises about 5.6%.
How the Housing Crisis Affects Sales
Due to the fact that there is a major housing shortage all around the United States, homes are still selling, even when prices remain unaffordable.
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People seem to re-shuffle themselves according to where they can afford to live and what they can afford to buy. The changes mean that only the people who can afford to buy homes in California will end up there, while locals will be priced out.
Affordable Housing Is Growing too Slowly
In many states, building affordable housing for families is one of the top priorities.
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California still seems to lag behind in this respect. They plan on building only 106,000 new homes in the coming year. But this number is not enough to keep up with the population increases.
The Best Time to Buy for Motivated Buyers
For anyone in the financial position to buy a home in the Golden State, now is the time.
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With house prices being slashed more by the day, sellers will start to become desperate to get the home off their hands.
The Market Is Expected to Bounce Back in 2024
Although the initial slump has caused a lot of fear for homeowners in the first portion of the year, the rest of 2024 will look different.
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The small amount of inventory will be the driving force keeping the market competitive.