Kenny Slaught Discusses Land Scarcity Affecting Market

Other factors affecting the real estate market that are particularly Californian in nature can be traced back to a general scarcity of land in desirable locations. The costs for undeveloped land are prohibitively steep, especially within the Los Angeles and San Francisco metro areas. Kenny Slaught points to regular setbacks in construction of new projects, resulting in many owners choosing to stay where they are and renovate, as Proposition 13, the 1978 amendment to the state’s constitution, has made relocating an expensive choice. Though the law states that future property tax increases will be capped at 2% based on 1975 assessments, one exorbitant exception takes place: when a sale is executed, a property is reassessed based on its current sale price. In the end, yearly totals are framed by purchase figures that vary month to month, as demand in California shifts seasonally (with most action taking place in June and a small increase at year’s end). Elements such as asking prices, interest rates, consumer confidence, negative equity status, quantity and quality of homebuyer jobs, disposable income, saving rates, and elements like major foreign investments also affect yearly totals.

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