I disagree about risk. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on September 24, 2003 at 21:16:27:
I disagree with your projection. I expect that in general property values will increase greatly over the next 20 years or so in California. The higher-priced properties may not go up as much as the lower-priced areas.
The projections are that CA will have the greatest increase of population of any state in the Union. Not surprising, since we already have the highest population and just average rate of growth could cause the largest number of new people. But, we are also projected to HAVE THE GREATEST RATE OF GROWTH of population of any state. So the demand will likely increase greatly. Think about that, the number one state for RATE of growth. Not average growth. Not above average growth, but the very top rate in the whole nation.
For a couple of decades the supply has not been built fast enough to take care of the demand and there is no prospect that it will do so in the next few years. Consequently, there will be increased shortages and prices should continue to go up. Not necessarily steadly, there might be some flattenings and declines.
There is, as far as I can determine, nobody who has a model of how high the property prices should go up or how high they should be. So nobody knows how much more the Coastal CA housing prices will go up or how to judge it. Those who said in the past–for the last 20 years at least–“The prices cannot go up much more” have been wrong. They may be right in the future. But I doubt it.
I think that there is no evidence that “… the bigger the boom the bigger the bust.” Maybe the bigger the boom, the potential for a bigger bust. But whether that bust will develop or not is not forseeable, I’d say. The higher the prices the greater the evidence for strong demand. Unless the supply starts shotting up, there is no reason to expect the property values to decline, I’d say.
And I know that it does sound crazy when you look at the prices here compared to other parts of the country.
No, if you want to make easy money in real estate, I’d suggest buying rental properties or houses in the non-Coastal parts of CA and hold on for the automatic escalater to wealth: appreciation.
Good Investing*************Ron Starr**************