As the pandemic made remote working a necessity, it significantly impacted the California City housing markets to a large extent. The housing market in California underwent steady appreciation in the last two decades. California house prices
rose 120% in 2019 vs 26% in the 2000s. The California City housing market also saw a significant impact coupled with the housing shortage in the state and an increase in people’s desire towards settling in suburban California.
Several companies adopted remote working as a viable option for daily work and encouraged employees to work from home. This eliminated the need of staying in the city to commute. Studies have also shown that remote working is better than working in an office. People who work from home are
47% more productive on average.
In the last two years, California has witnessed a steady stream of business professionals moving to the suburbs of California, like Sacramento and Stockton, from California City for
cheaper housing, as the need to live in urban areas for work and commute suddenly stopped.
Now that remote working is here to stay, it is expected to change the California city housing market significantly. Here’s how.
Effect of Work-Life Balance Trends on Housing Preferences
The cost of commercial real estate in California has surpassed the
national average for several years. With people unable to rent an apartment in the city at a reasonable cost and instead preferring to move away, finding a house in the city is no longer a priority. Now,
living in the suburbs provides people with the chance to live in larger homes, better school districts, healthier and safer neighborhoods, natural diversity, and lower real estate prices.
Surging Prices and Property Demands in the Suburbs
One of the primary reasons people saw remote working as an opportunity to move from California City was its housing crisis. Most residential areas of California have experienced surging rates that continue to increase steadily over the years.
The housing prices grew steadily by 8.5% every year on an average during the 2010s. This is because the state’s construction of new houses significantly reduced to an average of well below
90,000 units per year due to the recession of 2008. The shortage has since continued, plaguing potential homeowners in the city with worries about affordability.
However, now that urbanites are moving to
suburban areas of California, the housing prices and property demands are increasing in the suburbs every day. This shift from urban to rural has been good for people and working professionals but has increased the need for affordable housing in the suburbs, which is now surging in rates.
Since the housing market in California City is almost unaffordable for a lot of people, they are switching to relatively affordable suburbs like Irvine, Oxnard, Bakersfield, Clovis, Redlands, and others. As a result, the suburbs are experiencing growth as homeowners seriously consider choosing between property in the city or the suburbs. While suburban homes are still cheaper than those in cities, the gap between their rates is rapidly shrinking.
Current State of The California Housing Market
During the last two years, the California housing market saw a turbulent decline in housing rates since the housing preferences of consumers drastically changed. However, the setback in the housing market was temporary. Currently, the housing market is relatively steady, though the state still has a significant shortage of residential properties and homes.
However, California may experience a decline in sales of houses and
residential properties in 2022. According to
C.A.R.’s “2022 California Housing Market Forecast”
the median prices of homes may rise by 5.2%. Even though the sales projections are low, the recovering economy, and demand for houses in metro areas will drive up the prices of homes. The rate of new home construction in California is increasing slowly, which may lead to house availability and may cause changes in the market trends.
Increase in Demand For Specific Housing Features
Earlier, people had set expectations of rooms and kitchens when looking to buy a house. However, since people prefer to work remotely, they have evolved demands regarding the type of housing they want. A house with bedrooms and a kitchen is not enough for today's working professionals. Instead, they prefer spaces that enable them to have a home office or a separate room in the house where they can entirely focus on work. As a result, many multi-family developers are building co-working spaces in their rental properties.
Here are some of the specific features that people want -
People want additional space or room in the house that they can use to work from home. Houses with home offices are excellent examples of properties fit for people who work remotely.
- Proximity to Co-working Spaces
Like freelancers, most people who work in California prefer to buy houses with co-working spaces in the vicinity. These spaces allow people to step out of their homes and work independently on their projects without any distractions. Although co-working areas have existed for a long time, they have recently gained tremendous popularity and now become a preferred alternative to working in an office, especially among numerous self-starters and entrepreneurs.
According to
Upwork, freelancers providing skilled services from various fields will rise to 53% in 2021. This is an 8% increase observed in just the past two years. Therefore, co-working spaces serve as an opportunity to work and network with like-minded people while maintaining a distinct line between personal and professional life.
Other professionals who work remotely also include artists. Since California is home to several renowned
art schools and colleges, several people require extended continuous space or additional area in their house for work. Therefore, homes with work studios, warehouses, or empty garage spaces are also a popular feature among individuals. Other than this, the location of the property is also of importance. The development of
zoom towns across the US has changed the housing industry landscape. People are looking to purchase moderately expensive but comfortable homes in areas that used to be prime vacation spots, like Truckee, in California.
Future Impact of Remote Working Trends on the California Housing Market
The housing market in the region is highly competitive as buyers are looking for more living space. However, there has been a shortage of housing supply in the last few years. As the demand for houses increases, California will face an imbalance between supply and demand in its housing market due to a significant lack of residential properties, primarily in the Los Angeles and San Francisco areas.
Compared to last year, the housing costs in the state have been steadily rising, thus hindering affordability. The median home price in California is expected to
increase by 5.2% in 2022. California's housing affordability is also likely to drop by 23%. The state is still a seller's market and will continue to be so in the upcoming years.
Currently, several buyers are offering sales bids at a much higher rate than the asking price. As new people come to the city for work and seek more living space, the California housing market will be more competitive in the upcoming years. The rates will be driven by low mortgage rates and a continual shortage of housing supply.
Opportunities for Investment in Rental Real Estate in California
California city remains a popular dwelling area for people who work remotely, including singles, people with fast-paced lifestyles, and IT professionals working in companies within the city. However, the gap between homeowners and renters is steadily decreasing, with 45% of households in the city being occupied by renters in 2022.
Consequently, even though there is a housing shortage in California, investors are still looking for opportunities to invest in real estate. The prices of rentals in California are likely to rise at a slow and steady rate through 2022, with expected
rent growth of 7.1%. This slow supply may raise the rent prices, and financing and managing rentals become a tough problem for investors. However, the demand in the rental market, especially for single-family houses, will be a good opportunity for investors. Based on these trends, hiring property management companies will be a popular choice to tackle the management issues and deal effectively with your investment properties.
How Hiring a California City Property Manager Can Help
If you are considering buying a house in California city, it can be helpful to consult a property manager first. A qualified property management company can identify lucrative trends and help you invest in rental properties at the appropriate time, to earn maximum ROI.
