Trends in Southern California Real Estate

By: Kelly Renaul

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The very thought for most people of Southern California real estate brings visions of giant mansions on the oceanfront, complete with palm trees and perfect weather. The tide has turned in the country as far as real estate goes, and both nationwide and Southern California real estate statistics show that since early 2007, the housing market has been in the hands of buyers.

Since then, Southern California real estate prices and interest rates have fallen to exciting low levels for buyers. This has prompted more people to buy property in 2008 compared to 2007. Sixty nine percent of Southern California real estate buyers claimed that lower prices encouraged them to buy, and 31% cited the low interest rates as their main motivation to make a move.

Some reasons that the Southern California real estate market came to be in the hands of buyers were poor underwriting of contracts that left buyers unaware and unprepared for fluctuating interest and mortgage rates. Many of these people who had signed an ARM, or adjustable rate mortgage, could not afford the high, fluctuating interest rates and mortgage fees. This lead to an increase in foreclosures and lender owned properties.

The sharp increases lately in the prices of food and gasoline has also made it very hard for many people in Southern California real estate to keep their house payments up. The increase in costs of living also made buyers postpone purchasing a home. These trends together resulted in a large increase of empty, available homes and people who could not afford to buy them, driving the prices of Southern California real estate down to the floor.

Since there has been such an increase in the number of homes available for purchase in the Southern California real estate market, buyers enjoyed a wide selection of properties available. In 2006, Southern California real estate buyers had only spent an average of 2 and a half weeks searching for property. Traditional buyers, those not doing searches and virtual tours online to find a home, also visited twice as many homes before they purchased one this year.

This year, 19% of Southern California real estate buyers were first time homeowners. They spent an average of almost 10 weeks with their realtor before buying a house, and in 2007, first time homeowners had only spent about 6 weeks searching before choosing one.
In conclusion, Southern California real estate buyers also spent more time searching through homes before contacting an agent in 2008, averaging 8 weeks, as opposed to traditional buyers, who searched the old fashioned way for 3 1/2 weeks before having a realtor step in.

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