California is widely known as one of the most difficult real estate markets to enter. While home prices have slumped due to the coronavirus pandemic, the future economic rebound promises to turn around some great investments for people who are willing to take a risk.
The top 10 California cities in which to invest reflect a number of different trends. They range from large to small, city to country. They have all been targeted as areas that may experience significant home price growth and economic growth in the next few years.
David Ebrahimzadeh president of Corniche Capital and a leading opportunistic investor in both the private and public sectors, explores these 10 cities and towns and explains why each one could make a solid investment.
1. Sacramento
Sacramento is the state capital of California. It is located just northeast of San Francisco in a largely agricultural area. Buying property in Sacramento is regarded as a good idea because the price-to-rent ratio is 15.94. This means that renting a home makes more sense than buying in Sacramento. Potential rental incomes are high. It is poised to become a buyer’s market by the middle of 2021.
2. Oakland
Oakland’s median home value at $734,900 is attractive at about half that of San Francisco at $1,200,000. San Francisco commuters find Oakland attractive because there is a relatively short commute and adequate public transportation. The unemployment rate in Oakland has remained low at 3.6 percent despite the coronavirus pandemic.
3. Arden-Arcade
Arden-Arcade, located in Sacramento County, is another place with a hot rental market. 57.1 percent of all households in Arden-Arcade live in rentals. The median home value is relatively low at $371,000, meaning that the barrier to entry in this market is low as well. The area has also attracted business investments that have created growth in the city thanks to its expanding economy.
4. Joshua Tree
This small community in San Bernardino County has been experiencing major growth over the past few years. Median home values are up by 22 percent since 2018. It is a buyer’s market. The proximity to the beautiful Joshua Tree National Monument makes it an attractive city for nature lovers. It may be a good city to find an Airbnb property, but local regulations may crop up due to Airbnb’s unpopularity among local residents.
5. Los Angeles
Los Angeles has experienced growth in population and employment. Rental properties are very popular in Los Angeles thanks to the high home sales prices. This could be an excellent market to enter. Landlords find it easy to fill vacancies in Los Angeles.
6. San Diego
San Diego is an amazing place to live with its oceanfront setting and the strong business community. Many people who enjoy vacationing in San Diego would also want to live there if they had the opportunity. There are a great number of college students in the area from UC San Diego, the University of San Diego, and San Diego State University. The city thrives on tourism, biotechnology, and the military, and has high rental rates.
7. San Jose
San Jose may be experiencing some short-term problems because the companies of Silicon Valley are beginning to shift their operations to other parts of the country. This could create an opportunity for real estate investors to take advantage of a downward trend in real estate prices as the market is flooded.
San Jose is close to everything, including Apple and Google. It is easy to reach the ocean and the mountains. The high number of students also means that rental properties are in great demand.
8. Long Beach
Located in Orange County, Long Beach has much more affordable rates compared to the rest of the local area. It is a beautiful waterfront community that is well known as a mecca for surfers and tourists. It is also close to many large defense contractors such as Raytheon. This means that there is a high demand for rental housing.
9. Bakersfield
Bakersfield is located in the Central San Joaquin Valley. It is surrounded by agricultural areas and close to national parks. The population is growing, and employment figures are up even when considering the pandemic. Rents are reasonable at a median of $918 but the vacancy rate is low, leading to easy fulfillment of listings.
10. Santa Maria
Located in Santa Barbara County, this city has an impressive array of vineyards, trails, parks, and galleries. It is more affordable than neighboring Santa Barbara. Property investors can see a major turnaround from their investments in Santa Maria.
California Investments Make Sense
In one of the nation’s largest economies, investment in real estate makes sense. Taking advantage of population and economic growth is a good move for all investors, especially those who are interested in owning rental properties.
