Key Indicators to the California Real Estate Market

Real Estate is not a volatile market. It is predictable and its trends develop over long periods of time. California real estate has often been the trendsetter for real estate across the country and many look to California to predict what will be happening in other areas of the country.

Many people wonder when is the best time to buy. It doesn’t matter whether you are buying your first home or an investment property there are certain indicators that will help you know when is the best time to buy.

The best way to learn about the real estate market is to educate oneself about the current market. There is plenty of information out there to help you understand the current real estate market. There are articles that will help you identify trends in real estate.

Interest rates are probably the best indicator of the real estate market. A low interest rate will attract buyers to make purchases. On the other hand as interest rates rise, buyers tend to back away from the market.

In 2005, California interest rate averaged 5.7 percent, where as now in 2006 interest rates are already above six percent.

The number of building permits also predicts the current state of the real estate market. The more building permits the more demand for housing. In 2006 California has issued ten percent less building permits compared to last year.

The number of homes for sale is also an indicator. The more home buyers, the higher the demand for homes and therefore the higher the process. The number of homes sold this year in California is down 24 percent compared to 2005.

The number of homeowners in loan defaults is also a factor. In California many homeowners are opting for bad credit reports rather then paying inflated priced and fees.

Finally, the number of foreclosures is also an indicator. California foreclosures are up 19 percent since the last quarter of 2005. The rise of foreclosures means that consumer debt levels have raised and their spending is down.

In conclusion, the demand for housing is strong even if the amount of homes for sale is down.


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