California Real Estate Expert Predicts 20% Price Increase in 2013

[Corey Dutton]

California real estate investor Bruce Norris has predicted a 20% price increase in California residential real estate for 2013. This is a huge percentage increase, and many people are shocked by Norris’s prediction. But with so much price “momentum” in the California real estate market fueled by low interest rates, this would come as no surprise if it did turn out to be an accurate prediction.

Many of our repeat real estate investors that we do hard money loans for in California have been slowed down this year with regard to acquisitions. They are still getting the same number of properties under contract, but fewer and fewer of them are actually closing. The competition is fierce in California for residential real estate and the good deals are harder and harder to find. With hedge funds buying up everything in sight in California, this had added to the competition in a serious way.

Do you think Norris’s prediction of a 20% increase in prices in California is going to ring true? Or do you think it’s off base? Please share your opinion.

[Will Barnard]

Lets be clear here, Mr Norris's 2013 & 2014 predictions are not across the entire board of RE in CA. What he is talking about are homes within the FHA loan limits and his specific area of expertise is Southern CA (and more specifically, Riverside County (Inland Empire, etc.)
We are already seeing these price increases so it is happening before our eyes and you can not argue with facts.

Going forward, yes, interest rate increases could hinder such gains, however, the Fed just made it clear that rates would stay low until 2015. There are many factors driving these specific markets in CA, record low inventory levels are one, the fact that it is cheaper to buy than rent is another, that those who completed short sales 3 years ago will now (in 2013) be qualified for FHA loans, the affordability of the homes combined with the low interest rates make buying the better choice, and I am sure there are more factors I am missing.