Developers Strive to Meet the Demand for Homes in California

A report that was released on Wednesday indicates that there has been a significant rise in the prices of homes in California. According to CoreLogic, the price of a single family home increased by about 5.8 percent between May 2016 and May 2017. The report also indicates that Los Angeles County’s price increase was approximately 6.4 percent. The United States' average rise in the price of a house is about 6.6 percent. These margins have been caused by the shortage of homes. Real estate developers in the country have not managed to the build enough houses to meet the rising demand. The president of CoreLogic, Frank Martell, believes that the situation could get worse if this trend continues.

CoreLogic predicts that the price of homes in California will have reached an annual increase of the 9.7 percent by May 2018. The rise in prices will make it hard for people to purchase new homes, and the cost of renting apartments will also be inflated. The income growth of the residents of California will soon be outstripped by the rental and home inflation in the state, and this will make affordability a big issue. The CoreLogic report shows that cities that are in Southern California are likely to experience the highest price hikes. In Canyon County, one would need $609,000 in May to purchase a house. This price is 20.6 percent more than it was in May last year. Residents of North Hollywood currently need to pay $535,000 to own a home, and this is a 15.1 percent rise from 2016. The price of a home in ZIP code 92614 area of Irvine has increased by 36.4 percent, and it is currently $970,000.

Christopher Homes’ VP of land development, Bill Holman, believes that most real estate developers are blocked by regulatory laws. Mr. Holman is also the VP of Rosedale Land Partners, which is a company that in charge of the construction of the Azusa-based Rosedale community that comprises of 1,250 homes. It takes developers a lot of time to construct new houses in the state’s current regulatory environment. It is also difficult to find sufficient free space to develop buildings, and therefore, they have to refurbish old structures such as warehouses. Bill Holman said that some old warehouses in Fountain Valley are currently being renovated to create mixed-use residential houses. The only place that has some farmland left is Irvine. The availability of homes in California does not meet the supply.



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