California Real Estate Hot Spots

What passes as a “real estate hot spot” in California today is vastly different from what the term conjured up in the early half of this past decade. Today’s real estate hot spots in California are not places of sky rocketing sales prices, but exactly the opposite. The bustle of financial activity in the real estate industry of these cities and counties revolves around the dynamics of a buyer’s market.

Prices have fallen so much in the past couple of years in areas like San Diego and San Francisco, that foreclosures are on the rise and cheaper and cheaper selling prices are prompting investors as well as first- and second-time home buyers to put their money into the real estate market now, in hopes of seeing returns on their investment in the near future, when home prices are predicted to pick up once again. In other words, while the the real estate crisis caused many people to lose their homes and/or the money they put into investment properties, this same real estate crisis presents new buyers today with an opportunity to purchase prime properties at some of the lowest prices in recent California real estate history.

Wealthy Real Estate Spots
The financial crisis has placed many of California’s most expensive properties on the foreclosure block. Hundreds of multi-million dollar homes in cities like La Jolla, Newport Beach and Carlsbad have foreclosed to date. This turn in the industry presents today’s investors and home buyers with a chance to acquire assets in some of the state’s most expensive real estate sectors. These are areas where the median income is in the six digits and exclusivity has been a factor in the prosperity of their real estate market.

In Carlsbad, a rich beach town in the Northern part of San Diego County, where the median home price is over $700,000, homes suffered tremendously from overvaluation and shoddy financing practices. Today, many homeowners in Carlsbad are struggling to keep their homes, or to sell them without losing too much money. The only good news for these homeowners is that they still have their first homes relatively secured.

Second-home buyers overextending their financial reach have been the main reason for foreclosures in cities like Newport Beach and La Jolla, where median home prices are over the $1 million mark. The new availability of prime properties at foreclosure-level prices in such exclusive California cities has made them a hot spot of real estate activity as Costa Mesa realtors can attest to.

California’s Affordable Housing Markets
If cities like La Jolla and Newport Beach are the wealthy side of the current real estate hot spot spectrum, the other side is the famous Inland Empire region in Southern California, a region that stretches from the Easternmost parts of Los Angeles all the way to the Arizona border.

In the seventies, this area was a hotspot for first time buyers, looking to move into spacious, family-friendly tract homes for cheap. During the early 2000’s real estate boom, developers started to build a vast number of brand new homes, hoping to attract a new wave of first-home buyers. But the projected re-growth of the Inland Empire’s residential real estate market was cut short when the financial bubble burst. Now, there are thousands of new tract homes in the Inland Empire that are just sitting there, waiting for buyers. Foreclosures are still on the rise. In other words, the Inland Empire has become a top spot for investors.

Plummeting sales prices in the Inland Empire present a good opportunity for families or first time buyers. However, as reported in a recent Time Magazine article, these would-be first-time buyers are having a hard time competing with investors who are coming in and buying these foreclosed properties with cash, often at super-low auction prices.

Whatever the course this current buyer’s market takes, California’s real estate industry is predicted, by most analysts, as being on the course towards recovery. San Diego home prices are expected to rise about 13% by 2012 and home prices in San Francisco are projected to rise by about 12% by 2012.