California is known for having some of the most expensive real estate in the country. This is especially true in Los Angeles. Like most of the rest of the country, the values of real estate properties have been dramatically increasing over the last few years.
If you’re interested in investing, you may be wondering if this trend is going to continue. How long can the prices keep going up before they drop? Some have proposed that there could be a decline in prices over the winter, and they have seen slight drops already – such as a 1.9% decline in Los Angeles itself.
But what types of things suggest that the prices will go up overall, especially when looking at the big picture?
Supply remains low
One of the biggest reasons for the increase in price is just that the supply of properties is not as high as the demand. From an investment perspective, people can find this beneficial.
The market is incredibly competitive, the real estate here is beautiful and Los Angeles is the second largest city in the country. It is likely that supply will be lower than demand for the foreseeable future.
Higher interest rates
Another reason for recent increases is that interest rates have gone up – this is often a bit more difficult to predict. It does seem that rising rates are the norm right now, but there could be a shift in the future. Fortunately, this is unlikely to wash out the gains made by the fact that the supply is simply still low and the prices of comparable properties are also increasing.
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