As the country begins to make significant strides out of the pandemic, California’s real estate market looks to enter a strong rally. As industries measure their recovery, real estate professionals in the Golden State are back at 99% of their workforce strength. However, too much housing growth can cause broader problems.
How can growth cause problems?
As we’ve written before, California is in the midst of an extended housing crisis. With that in mind, it seems counterintuitive to worry about how “fast” the housing market grows. On the contrary, more housing produced should be a good thing.
However, housing requires significant infrastructure, such as:
- Sewer lines
- Power grids
- Natural gas
- Traffic management
These necessary infrastructure pieces are what allow a place to exist. If a community were to “spring up” in an unused area without any infrastructure at all, that community would inevitably fail.
To invest or to wait?
With those concerns, it’s natural to wonder what the proper step for your company is during this solid real estate market. You may feel pressure to invest in new developments; you may feel passing up on opportunities will damage you in the long run. These are natural questions and feelings regarding an impossible to ignore industry rally.
Real estate’s position and attractiveness as an investment is its natural stability. While markets may experience frequent fluctuations, the value of real estate often increases with time. If your company has a successful venture planned, the current boom in residential real estate may not change your plans at all.
It is wise to continue with your current, safe, secure long-term plan even in the face of opportunity. Yet, some options might be too attractive to pass up. With that in mind, thoroughly vetting a chance from a financial viability and legal standpoint will allow you greater control of your outcomes.