08 Jun The California Home Supply Shortage. Why is this happening?
The California Home Supply Shortage.
Why is this happening?
We are seeing home prices moving up here in Southern California, and we’re not seeing any reason for them to come down. One of the reasons we are having these issues is a lack of supply caused by people staying in their homes a lot longer.
It used to be that people lived in a house for seven to eight years, now we are seeing people staying up to 10 to 11 years. The last recession was so dramatic that people were just trying to hold on to their homes.
These homeowners had modifications or delays in their payments, were trying to figure out new terms with the lenders and some of them had even balloon payments when they tried to sell. So many people decided not to sell and stay put in their homes.
Some people who have lived in their homes long enough that they have really good mortgage interest rates. So they don’t want to sell and get a higher interest rate on a new home. Even though the rates are low right now the challenge right now for these people is that there’s nowhere for them to go to because there’s just not enough home inventory.
Older baby boomers want to move out of their homes, but retirement homes are very expensive, and they don’t want to move out to more affordable states. They want to stay close to families, close to the kids and grandkids.
The big question is what are they going to get for the same amount of money they are paying for their current homes?
We know people who have 3000 SqFt houses where they pay $1,800 a month and $1,800 month is not even going to get them a condo for rent. There are not a lot of options for them to move here in Southern California.
So these people are still living in houses a lot bigger than they need. They’re still dealing with the maintenance issues, stairs, and not the best conditions. Because in California we’re not building enough single-story housing for our seniors. They have essentially have to move out of state to be able to find the types of homes that they want, which a lot of them don’t want.
We are seeing a big Exodus out of state to places like Nevada, Arizona, Texas, and Florida. Due to the fact that a lot more builders are building the products that our seniors are looking for in other states.
What is being built in California is at an expensive price point. So a lot of people that want to move out of their single-family home and take advantage of prop 60, or prop 69, where they can take their tax space with them. But the transition is conditioned by the fact that they have to buy a home that at the same price point as their home or less.
So they can’t move up and that’s holding back a lot of our seniors from moving to their next home and allowing a younger family to move into that house. So there is a dysfunction in the market here in California. Which hopefully we’re going to start working on it from the legislative perspective and hopefully improve some of that, those supply dynamics. To allow for prices to come down a little bit and improve the affordability.
Talented and brilliant representative, and a wonderful person.
We are so grateful to have worked with him. And when the time comes to sell or buy a home again, there is no one else we could imagine turning to.