California’s Housing Bubble: Should You Invest in Real Estate in the South Bay?


Since the Great Recession, housing prices in California have continued to skyrocket to near-unbelievable levels. However, with 2019 nearing its center, some experts are saying that nationwide price growth is finally starting to slow down. That means that, if you’re an investor in South Bay, Los Angeles, now is the time to sell your holdings and get the most profit. However, this news means different things for those who are interested in investing right now. In this post, we’ll tell you a bit about how investors should act in this slowing market.

South Bay Real Estate

Housing prices in the South Bay (and in fact, across all of California) hit record highs last year, and they’re still in uncomfortably high territory. You’d be lucky to find anything for sale below $500k that’s not on the very outskirts of the area today. With the U.S. median home value at only $225k, that’s far out of the price range of many Americans.

However, those prices can mean good things for real estate investors. Even if home prices only rise by a few percentage points per year, the higher the value of the home, the bigger the return on that investment. That makes the South Bay a decent market for buying and holding properties while waiting for property appreciation. However, if homes aren’t due to appreciate this year, that could result in the same percentage of losses instead if the market downturns.

Should You Buy?

There are a few things to keep in mind if you’re thinking about investing in the South Bay market. Several people have predicted that the housing boom might finally be due for a bust, or at least a slowdown, within the next few years. That should discourage many investors from buying right now since they’ll lose their investments if prices fall. However, the South Bay may be the exception. The area is booming with new investments, activities, and nightlife. Additionally, other analysts have argued that California is not due for a housing bust because of its still-growing job market and inability to keep up with housing demand.

To top it all off, buyers in California seem to be taking a backseat to the action more so than they have been in recent years. Across the U.S., the rate of home buying has slowed this year, and the same may apply to the South Bay area. Experts think that residents are just growing tired of the inflated prices, and would rather wait out the market until prices reach more reasonable levels.

Right now, the housing market seems to be, in many ways, edging towards its peak. Experts seem divided on whether we have a few more years of price growth ahead of us or whether a market downturn is coming soon, but there is a consensus that it’s at least slowing. That alone should be something for South Bay investors to think about, but that doesn’t mean they shouldn’t buy. They should purchase new properties with caution as the market continues to change, but for now, it’s still a perfectly hot buyer’s market.

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