Home prices are up around the country and they’re up even more in Southern California. This is great news for real estate investors, as a mix of strong demand and population growth is making creditors more confident in funding projects, while more buyers are helping investors sell inventory more quickly.
The National Picture
Real estate has been improving for quite some time and that hasn’t stopped in recent months. In fact, home prices rose 4.3% in November after rising 4.5% in October.
Some skeptics point to that slight slowdown in growth as a sign of an unhealthy market and some economists are even warning that the market could suffer in 2015. S&P Dow Jones Indices Economist David Blitzer warns that “prospects for a home run in 2015 aren’t good,” noting that “difficulties facing the housing recovery include continued low inventory levels and stiff mortgage qualification standards.” In other words, a lot of buyers are on the sidelines not because they want to be, but because the banks aren’t lending to them.
This is an old story, but it’s a very real one for those buyers who can’t qualify. It’s also a concern for sellers, who would like more buyers to come to the market so that they can sell more quickly and at higher prices.
But despite this negativity, Blitzer admits that the economic environment is getting much better and at a faster rate. “2014 was a good year for job creation and weekly unemployment claims – good short term indicators – which continue to provide upbeat reports. Consumer confidence, helped by cheap gasoline prices, is strong, and a good GDP number is expected this week,” he notes.
Southern California’s Strength
That negative tinge is not universal across the country, however. In their report, S&P Dow Jones noted that “strong price gains” are seen in the following regions: “California, Florida, the Pacific Northwest, Denver, and Dallas.” Southern California is particularly strong, thanks to an improvement in the local economy and a growing population.
In a separate study by CoreLogic, home prices in Southern California rose 5.1% in December and home sales saw a surge at the end of the year. “December’s uptick in home sales might indicate renewed interest in housing thanks to low mortgage rates and job growth,” said CoreLogic analyst Andrew LePage, echoing Blitzer’s sentiment.
The gains aren’t even limited to luxury properties, as the CoreLogic report noted gains in Riverside and San Bernadino counties were stronger than in Orange County and wealthy neighborhoods throughout the region.
Financing for Investors
If you need financing for a project, you might find banks are hesitant to help out. Credit is still tight and many big banks are scared of real estate projects they don’t fully understand. Real estate creditors with years of experience in the market, however, are eager to invest in projects because they know the market is growing and they know what will make a profit.
If you’re a developer or rehabber in the Southern California area, an asset-backed hard money loan from Socotra Capital is just what you need to get your next real estate project off the ground. Take advantage of the positive market trends in your area with our streamlined process and get started today.
Your real estate assets are your best investments for the future. At Socotra Capital, we’re proud to be the premier direct hard money lender for California real estate. Contact us today to learn more about how we can help.