California Real Estate
A California Real Estate Market Forecast
As the sub-prime mortgage crisis continues to tighten its grip on real
estate prices across America,
the fate of the California
housing market is hanging in the balance.
While California
has been affected as much, if not more, than anywhere by defaults linked to
sub-prime loans, prices continue to appreciate and some analysts believe the
state may escape the brunt of the slowdown.
But at the same time, mortgage delinquencies were up 46 percent in California last year
compared to a five percent increase nationally. The chief cause of these
delinquencies is people being unable to repay sub-prime mortgages after 17
successive interest rises in the last two years caused repayments to rocket.
Some of these sub-prime loans
allowed consumers to borrow as much as 110 percent of their income. The loans
were usually offered at very low and attractive teaser rates that lured
borrowers in. However, many of those who took out these loans are now in
financial difficulty and defaults are on the up. Last year, ten of the top 12 metropolitan
areas where sub-prime mortgages were acquired were in California. Nevertheless, the market has
remained robust. However, lenders are
now tightening their belts and the originations of sub-prime mortgages are
expected to drop between 30 percent and 50 percent this year nationally.
Median California house
prices are still on the up though. Additionally, the state has distinctively
strong employment trends that should help buoy the real estate market there. If real estate in California
as a whole is in a relatively strong position, then Coronado real estate should be healthier yet.
Because of its exclusivity
and the fact that most residents are quite well off, the sub-prime mortgage
crisis is not really an issue when it comes to Coronado homes. Sub-prime mortgages are usually offered to
the less well off. The average Coronado
home buyer will look at finance options that offer far lower interest rates.
In addition, Coronado homes have been
among the most sought after in the country for over a century, and this is
likely to continue. For any quality Coronado home that goes on the market,
there will be a queue of buyers that will be interested, and this is at the
very least likely to keep prices stable when it comes to Coronado real estate.
From an investment point
of view, rental costs for Coronado
homes are on the up. With this combination of interest from both home buyers
and investors, any sharp decrease in the value of Coronado real estate seems unlikely. As mentioned, both California
and Coronado
real estate values hang in the balance at the moment, but for the time being at
least prices are still appreciating.
