California Homes are Historically Great Investments

If you’re seeking a reliable place to put your long-term real estate dollars, the Golden State is a spectacular choice. It seems there has always been a gold rush of one kind or another in California. Nowadays, treasure-savvy folks are finding it’s real estate. Why? Since 1971 median home prices in California have increased more than tenfold.

According to the California Association of Realtors (CAR), California home prices rose almost every year between 1971 and 2012. That shows these homes are a rock-solid investment. This infographic from CAR illustrates this fact perfectly:

For more than 40 years, California has provided outsized wealth growth for real estate owners, and the future looks bright. The state has some unique characteristics that will continue to make it a great place for real estate investment.

Valuable Land in California is Scarce

Most of the major metropolitan areas are densely populated, and land near the city centers is mostly unavailable. It can be difficult to find large parcels in almost every city. This means that homes just beyond those relatively short distances are going to steadily increase in value. Supply is short, and demand will remain high for the foreseeable future.

California has Property Tax Limits

Proposition 13 was enacted in the late 1970s after Californians grew weary of constantly increasing property taxes. This initiative limits property taxes and their increases. If you buy property in California, your regular property taxes (not including additional county bond levies or Mello-Roos taxes) are limited to 1% of the total purchase price of your home. That original tax amount cannot legally increase more than 2% per year, and the state average has remained near 1.5% since the bill was passed. In most states, your property taxes can go up each year according to the property’s value, but not here. That is a great incentive for real estate owners.

California Population will Steadily Increase, Along with Real Estate Demand

Human populations have done one thing throughout the last several thousand years, and that is increase in size. The amount of livable land on the planet has stayed the same during the same period. U.S. population is expected to increase for at least 50 years, and coastal homes are becoming more and more desirable. What does all that mean for the real estate investor? Property values in states like California will continue to increase throughout the coming years.

Not all homes will be great investments. You need to be a skeptical and informed buyer. If you do your research and pick the right property in California, you could be looking at some impressive value increases in the near future. Of the many places to invest in real estate, California is at the top.

For the full California Association of Realtors report, click here


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