What Are the Hottest Cities for Investing in California in 2018?
When it comes to the California housing market, before jumping into the hottest cities for investing in California, it is important to look at the context of the current real estate market and where it is heading in 2018.
This article will provide you with estimates and predictions for the California housing market 2018 and the hottest cities for investing in California in 2018 based on data gathered from Mashvisor, Redfin, and Trulia.
California Housing Market 2018
The California housing market 2018 is one of the top markets to keep an eye on this year. The market’s phenomenal performance, shortage in supply, and growing prices might show a side of the housing market that we’ve never seen before.
Before we get into the details of the hottest cities for investing in California 2018, let’s take a look at the highlights of the California housing market 2018 based on Redfin’s forecast and estimates:
Homebuyers are expected to leave the high-tax states due to the new tax reform bill and the elimination of the SALT (state and local tax) deductions in areas where taxes are already high.
Fewer homeowners will sell their homes due to the tax reform’s effect on homesellers and the increase in the amount of time in which they must have lived in the property prior to selling it in order to take advantage of tax deductions on capital gains.
Millennials are expected to popularize urban suburbs as they are not content with the available cities or the suburbs that surround them, and they are demanding a new type of neighborhoods – “urban suburbs” – which are high-density neighborhoods in suburban areas that have urban qualities.
Homes will sell faster due to the shortage in supply.
No bubble is expected despite the rising concerns that the California housing market 2018 will face a price bubble, but the experts predict that no bubble will be seen in 2018 due to both homebuyers and sellers being on the same page when it comes to prices, and due to the decline in the homebuyer debt rate.
Learn more about the California housing market 2018.
Hottest Cities for Investing in California 2018
The California housing market remains one of the top markets for investing in real estate, and it is expected to keep growing in 2018.
However, Californian cities vary in their performance, and the median prices and rental rates in each city vary significantly. So, take out your investment property and Airbnb calculator and find out what are the hottest cities for investing in California 2018.
San Diego
One of the best features of San Diego – its Mediterranean climate – has always kept the city relevant when it comes to real estate as it brings life to the city year-round and makes it a perfect destination for outdoor activities all year long.
On this list of the hottest cities for investing in California 2018, San Diego has the highest median prices, which is to be expected as it is the only coastal city on this list, and home prices in coastal cities are typically higher.
According to Trulia’s data, here are the stats for the San Diego housing market 2018:
- Median Sales Price: $555,000
- Median Monthly Rent: $2,775
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Additionally, according to Trulia’s historical data, the median sales price of homes in San Diego has been on the rise throughout 2017. The market trends in San Diego indicate an increase of $40,000 (8%) in median home sales prices over the past year.
Although the number of sales has been going up and down steadily over the years, San Diego’s market trends have been characterized by rising and dipping, with the highest amount of sales being made in September of each year, and March having the least amount of home sales each. This indicates that the San Diego housing market 2018 will have a similar pattern.
At the same time, although the number of sales has been relatively stable when it comes to the highest and lowest points throughout the year, the median sales price of homes in San Diego has been steadily increasing over the years. This indicates that the median sales price of homes is expected to keep on rising in 2018, and might reach its highest point yet.
Related Read: The Best Cities to Buy Rental Property on the West Coast
Palm Springs
Palm Springs is the second city on the list of the hottest cities for investing in California 2018, and it is the second most expensive city when it comes to median sales prices after San Diego.
According to Trulia’s data, here are the stats for the Palm Springs housing market 2018:
- Median Sales Price: $359,000
- Median Monthly Rent: $2,500
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The market trends for the Palm Springs housing market indicate a decrease of $17,500 (-5%) in median home sales over the past year.
Trulia’s historical data of the Palm Springs housing market shows that the median sales price of homes in the market reached its lowest point of 2017 in February and March, which was then followed by an increase that reached its peak in May. Since then, the market has shown another decrease in median sales prices.
On the other hand, the median monthly rent took a dip in March before rising back to a stable and high rate in the following months. The median monthly rents remain high in Palm Springs in comparison to the slightly volatile median sales prices, making it a good choice for investing in rental properties due to the high price-to-rent ratio in the market.
Related Read: Airbnb Rental Properties – The Best and the Worst Places to Invest
Sacramento
If you’re looking for the best cities for investing in California 2018, then you should consider Sacramento.
Sacramento’s real estate properties are far more affordable than in many of the other cities in California. However, the home prices in the area have been on the rise for the past few months, and there are no indicators that this increase in prices will stop in 2018.
According to Trulia’s data, here are the stats for the Sacramento housing market 2018:
- Median Sales Price: $306,000
- Median Monthly Rent: $1,731
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The Sacramento housing market trends indicate an increase of $28,000 (10%) in median home sales over the past year, which is a very considerable growth rate. On the other hand, the monthly rental rates in Sacramento have not shown a similar increase.
This means that over time, renting will be much more affordable in Sacramento than purchasing a property. But until that happens, homes in the market are still affordable, and real estate investors should take advantage of the prices before they grow any further.
Related Read: What Are the Features of the Best Investment Property?
Joshua Tree
The last city on the list of the hottest cities for investing in California 2018 is Joshua Tree, which is also the most affordable city on this list. Joshua Tree has always been an affordable destination for real estate investors and homebuyers alike due to the low sales prices of real estate properties in the area.
According to Trulia’s data, here are the stats for the Joshua Tree housing market 2018:
- Median Sales Price: $154,750
- Median Monthly Rent: $1,012
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Joshua Tree is perhaps the most rent friendly city on this list even though it also has the lowest sale prices among the other hottest cities for investing in California 2018.
The market trends in Joshua Tree indicate an increase of $19,750 (15%) in median home sales over the past year, which is the highest growth rate in home prices on this list. At the same time, Joshua Tree’s historical data indicates a decrease of 1% in median monthly rents during the same period.
This means that in 2018, Joshua Tree’s housing market is expected to become more rent friendly and less affordable for homebuyers, as home prices are expected to keep on rising, while rental rates are expected to stay relatively low or even shrink further.
Related Read: Investing in Joshua Tree Real Estate: An Unexpectedly Good Opportunity
Final Thoughts
California will be an interesting market to keep an eye on in 2018. The hottest cities for investing in California all show high potential for growth, with some being more favorable to homebuyers, while others being more favorable for renting properties.
These hottest cities for investing in California 2018 all share the same traits that are affecting the California housing market in general, so it might be more challenging to predict with accuracy where these markets are heading. However, based on the data gathered and the market trends over the past year, these are the projections and estimates that are expected to take place in these cities.
Are you looking to find the best investment properties to invest in these cities? Head over to Mashvisor and begin your property search using some of the most unique and flexible search tools available to find the most relevant and profitable investment properties based on your specific search criteria.