Should I Buy in this California Market cycle?

[James Allen]

So I'm just closing on our first investment property in Atlanta, GA in the next 1-2 weeks. I should have enough cash in the bank left over for putting a deposit on our first live in residential place in California. I'm trying to make sure I'm buying at the right time however. 

Everything I've seen thus far about the market in California is pointing us towards hitting our peak of the market within the next couple years or so and there's not much to grow, also we're only predicted to have a small bump down in the market from what I've seen and not like the crash of 2008 from what I've seen. However, with mortgage interest rates predicting to go up this year and the next upcoming years and with their still being some room to grab some minimal appreciation along the way, I'm trying to determine if now is a good time for my family to buy a home before rates start going above 5 and maybe even to six in the next few years? Any advice would be appreciated...

[David Faulkner]

Originally posted by @Jeff Keller:

@Andrey Y. I don't know about the previous thread but there are a huge number of homeowners in Silicon Valley that will tell you home prices have outpaced inflation for decades. Maybe for the country as a whole that is true but jobs and people move affecting areas dramatically.

I would agree and say it has been the same in SoCal for about the last 50 years. I would also add that inflation itself is also local ... it is possible that different regions will have higher or lower inflation, even sustained over decades as well ... that is why there is variation in the cost of living (not just in RE) from place to place.

[David Nguyen]

Great to hear James! Congratulations!

[Michael Lee]

Hello and thank you for that pitch!  I agree with most of what you said.  I personally think given your wring to move to a more predictive area like Dallas Texas.  I think the liberals are putting their arms around California and will continue on making it less profitable.  I might be a little biased about Dallas, since I was born and raised there and still live in Dallas County but we usually do not suffer like the rest of the country does when a recession or depression hit.  One of the biggest factors is its diversity in economics and population growth.

One of my biggest fears is that Trump might screw that up by putting fear into the immigrants that make our economy better.  If he does not screw things up I believe that the south or southwest will do better in our lifetime.  I am 60 years old now and tend to be a little opinionated.  The only thing I have think I am bad about is speaking my opinion.  I have to admit that I was expecting to see that you disclosed your company promotion at the end of your letter.

I do think that California is at a peak in a seller's market but it's hard to tell how long it will last and what will be it's length of time.  I would stay away from buying anything near the "B" or "C" investments and get a good deal on upper income homes in the right neighberhood that has style.  Otherwise, save all of the money you can and wait for a buyer's market.

Good luck to you!

[Sam Van Horebeek]

It is difficult to predict whether real estate prices in California will go up or down in the near term. it also depends very much on exactly where - SF has been going through up and downs but I think most of us had wished they had bought anything in that city at any point over last 15 years. It has seen bubbles and crashes but if you sat those out, you would have made some decent capital gains.

I can also add that there are a large amount of Asian investors who are interested in California. Chinese now have some foreign currency issues to deal with but I can tell you that the demand is huge, so once the capital controls are released the funds will flow back into California.

[Jen L.]

@James Allen  Have you thought about buying a duplex?  Live in one side and rent the other side out?  This way, you have a primary residence and a rental.  You can get some hands-on rental experience.  The power of appreciation for CA properties is great but it is a very long-term game.