WASHINGTON, D.C. – April 18, 2013 – (RealEstateRama) — The homebuilding boom could be returning to parts of California, as real estate values are starting to show strong signs of recovery in the last 12 months. According to an article by the LA Times, demand for homes in some areas of California is returning to pre-recession levels.
Homes are now being built at a faster rate. There were 2,097 new starts in the south of the state over the last quarter of last year – a growth of over 55% in residential building activity from the same period in 2011.
The figures were obtained from research conducted by housing industry analyst Metrostudy, which investigates data and trends in housing and real estate markets.
While 2011 is regarded as the worst year on record for the construction industry, the bounce-back is being seen as a step towards a return to market health. Some analysts are now suggesting these developments could be enough to boost the wider economy, as real estate markets return to pre-crash levels.
It’s not just demand at the lower end of the market that is recovering. Those purchasing homes valued at over $1m have also started returning to real estate, and there have been frenzied conditions with some people even camping to secure the chance to buy in some of the more affluent areas.
With the median home now costing just a touch over $400,000, prices too have grown by almost 20% over the last 12 months. This is up from around $250,000 in 2012.
Real estate price rises are generally considered a signal that demand is increasing, and reports suggest some builders are struggling to keep up with demand.
Economists are welcoming the developments, suggesting that a return to home building will create much needed jobs and growth in the Californian economy. Gerd-Ulf Krueger, from HouseEcon.com, said a recovery in the housing economy could help the wider economy improve at a faster pace, especially when builders start to move to new projects.
“They are going to begin with the development of new land, and that is typically about a third of the cost or more of the overall house. That is going to have a pretty big impact on the housing economy.”
Low interest rates and depressed prices in some segments of the real estate market have allowed housing interest in some parts of the state to soar. Land values remain comparatively low, and building firms are jumping to respond to these favourable market circumstances.
Mortgage lender AmeriSave said the news from the California market could be a bellwether for more significant improvements further afield.
“The Californian economy is the eighth biggest in the world – bigger than Spain and emerging giants Brazil. When housing data starts to pick up in California, and with this degree of pace that could well be a positive sign for the market and the economy as a whole. Follow us @AmeriSave on Twitter as we track the industry.”
The Californian housing market was badly hit by the housing crash, with 2011 statistics reflecting the low-point in the market price cycle.