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2021 Accounting Shows California Real Estate Further From Reach
As we leave 2021 behind us, ledgers are now showing the increased costs of California real estate over the past year.
The real estate market in California mostly mirrored the national trends in 2021, with home prices increasing by double digits in the more affordable, outlying suburbs and in smaller metro areas like Riverside and Sacramento. In urban markets like San Francisco, the increases were more modest — at least by 2021 standards.
As for home prices overall, they far outpaced the national median price. In October, the median sale price of a single-family home in California was $798,440, up 12.3 percent from the year before, according to information from the California Department of Finance — more than twice the national median sale price of $353,900 reported in November by the National Association of Realtors.
Jeff Tucker, a senior economist with Zillow, said the Bay Area’s housing market was one of the state’s coolest in 2021, with home values rising sharply but at a lower rate than statewide values. By Zillow’s calculations, he said, the city of San Francisco saw the “typical” home value increase by 9.3 percent, to $1.53 million, from November 2020 to November 2021, compared with a statewide increase of 20 percent.
“But it’s like a fractal,” he said. “You zoom in and the pattern reasserts itself,” with the national trend of more affordable outlying areas seeing the most significant price growth.
The East Bay, for example, which includes Berkeley, Oakland and the surrounding suburbs, saw stronger price growth. “Oakland was the market that saw the biggest increase in demand,” said Daryl Fairweather, the chief economist for Redfin. “Everyone was leaving the city and going across the bridge.”
The median sale price of a single-family home in Alameda County, which includes Oakland and Berkeley, was $1.3 million in November 2021 — up 24 percent, from $1.05 million, in November 2020, according to data from the California Association of Realtors. In San Francisco, by comparison, the median sale price for a single-family home was $1.9 million, an increase of 12 percent, from $1.67 million, a year before.
“It was crazy all year long,” said Daniel Stea, a broker and lawyer who owns Stea Realty Group and works in Oakland and Berkeley. That is, with the exception of a brief slowdown in June, he said, when bidding-war fatigue seemed to set in and some buyers may have headed out of town, post-vaccination. But demand picked up sharply later in the summer, he added, with move-in ready homes that had work-from-home space and backyards often getting a dozen or more offers.
Sacramento was one of the most in-demand destinations for buyers seeking bigger homes at relatively affordable prices. The “typical” value of a single-family home there in 2021 was $472,000, according to Zillow’s estimate — up 22.3 percent from 2020, but still far less than the statewide average. “The area has newer and bigger homes than its coastal neighbor to the west,” Mr. Tucker said, referring to San Francisco. “That’s a good example we saw of the trend in a lot of the country.”
Los Angeles also saw strong price growth. In November, the median sale price of a single-family home there was $810,000, according to information from Redfin, up from $730,000 the previous year — an 11 percent increase that reflected a mix of larger price increases in more affordable areas and smaller ones in already pricey places like Santa Monica, Ms. Fairweather said.
Still, the luxury market soared in affluent enclaves like Montecito, near Santa Barbara, which made headlines in 2020 when Prince Harry and Meghan Markle, the Duke and Duchess of Sussex, bought a $19.9 million home there. In 2021, it continued to attract wealthy buyers, and the average sale price increased by 43 percent over the prior year, to $6.46 million, said Martha J. Mosier, the president of Berkshire Hathaway HomeServices California Properties.
Her explanation? “More and more executives no longer have to remain in L.A. or in San Francisco.”
Inventory in most of the state remains low, with the number of active listings down more than 30 percent, said Danielle Hale, the chief economist at Realtor.com. San Francisco and Los Angeles saw listings increase slightly, year over year, she said, “but because buyers are pretty active, those homes are being snapped up quickly.”
So what’s in store for California in 2022?
“A lot of these California markets are going to see home prices grow half as fast as they did in 2021,” Ms. Hale said. “That should be a relief for buyers.”
She and others cautioned, however, that the slow pace of construction meant that demand for homes would likely outstrip supply in much of the state for the foreseeable future.
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