To some, it is starting to look like the California real estate boom could be finished. San Francisco home prices have seen 0% gains in the past year, after boasting 50% appreciation in the previous 5! Other major job centers in California, such as Silicon Valley and the LA Basin, are seeing either stalled or slight growth, compared to double-digit gains that were commonplace in the middle part of this decade. So, what does this mean for homebuyers, homeowners, and renters? Let’s take a closer look.

End of a Boom Does Not Mean Bust

Even if home prices in America’s tech centers fail to grow in the coming years, it does not mean that prices are liable to crash. Sure, some markets are overpriced by 20% – 30%, and we could see a bounce back to more reasonable prices. However, the housing boom was not built on the same quicksand that we saw in 2008 (subprime lending); this time, it is built on the tech explosion. Whatever else it might be, tech is built on true innovation, and the jobs and incomes that it helps create will be much more durable.

Is the California Real Estate Boom Finished?

What Should Real Estate Consumers Expect?

If you live in a major job center that has enjoyed rapidly escalating home prices in recent years, it is likely that home prices will fall or stay the same in the next few years. Home prices are built on supply and demand. When high-earning buyers and renters move to an area with tight inventory, prices rise. When these people find homes, demand for available housing drops along with the pricing.

All the while, rental income should be constant. Homeowners who bought real estate at the height of the market should hang on for at least a few more years (if possible) or sell soon. For those wishing to buy, the hunt for new deals should begin as prices begin to stall and fall. If you are looking to save on your next house purchase in a challenging real estate market, use Propy’s transaction management platform to cut down on the time and costs. Propy cannot make your new home any cheaper, but it can make the transaction more affordable, more secure, and much less of a headache.


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