By Elizabeth Zach, RCAC staff writer
California’s real estate market appears to be boxing both buyers and sellers into their current homes, and is also affecting home construction across the state.
The state has reported a sharp decline in home sales, decreased inventory and escalating home prices, all of which have created a bubble, whereby the median price for a home there is at an all-time high of $500,000.
One cause, according to Eric Sussman, an accounting and real estate professor at the University of California, Los Angeles, is the new tax law, which limits home equity loan interest and property tax deductions. It also impacts the affordable housing supply. Moreover, he points out, wages are not keeping pace.
“The real wage growth is squat,” Sussman told the online publication Bankrate. “It’s been persistent for some time. You’ve got wage growth running, nominally, at 2.5 percent and inflation running at 2.5 percent so you’re treading water. Those are national trends, they’re just magnified in California.”