Benefitting from the housing bust? In California, many are
During the residential housing boom, home prices soared so high in some parts of the country that you had to rich to afford homes in them.
California saw some of the biggest gains in home values during this time. Wanted to buy in the nicer neighborhoods of San Francisco, Los Angeles or San Diego? If you didn’t have money pouring out of your ears, you were out of luck.
Today, though, that has changed. According to a recent story by Reuters, California’s housing market has crashed so severely, homes are now affordable for a growing number of first-time buyers. At the same time, the falling home prices in the state are also providing opportunities for housing investors and speculators.
Who said that a crashing housing market didn’t come with its own silver lining?
The news in California is especially good for those first-time buyers. For one thing, they’re not trying to unload a home of their own. That’s a definite plus in this market. Secondly, home prices in even some of the nicest communities in California are dropping. Interest rates are low, too. And finally, sellers in the state are desperate, and are willing to compromise on everything from price to repairs to move-in dates.
The lower prices are definitely having an impact in California. The Reuters story says that home sales in the state in the fourth quarter nearly doubled. Some of this is due to first-time buyers entering the market. Other sales, though, are the result of investors and speculators buying low and banking on the hope that the housing market will begin a turnaround in early 2010.
However, as the Reuters story warns, speculators might want to be careful. Yes, prices are low. But no one really knows if the housing market has reached its bottom yet. And while many housing industry analysts are predicting that housing values will begin to rise again in early 2010, others are not as optimistic. They are predicting an even longer slump, which would certainly throw a wrench in the plans of speculators and investors.
But for first-time buyers? I’d say jump into the market, especially if you plan on owning your home for 10 years or more. With housing prices having fallen so far already, first-time buyers who purchase now and don’t sell for several years will more than likely see a healthy profit when it is time for them to move on to a new home.
