Rental prices in California
Having a shelter is not enough to the majority of the Californians. It is actually the desire of every Californian to have a decent and reasonably located home. In California, people compete for houses close to places of work, shopping malls, schools and recreation centers. Obviously, this is a common phenomenon in the rest of the USA. However, the most unfortunate thing is that rental prices in California are far higher than in the rest of the USA. In fact, the cost of housing in California is very expensive to an extent that many people struggle to find houses that meet their needs at affordable rates.
Nevertheless, many people prefer to live in California instead of moving to the surrounding areas. It is worth noting that the high cost of housing in California has been there for some time, and is actually a major concern for the local policy makers and the state. Property management firms in California know that the demand for housing is very high and keep on revising rental rates from time to time. A good example is property management Fair Oaks CA where rental prices for both multi-family apartments and single-family homes persistently increase.
Generally, rental prices in California are much higher than in other states on average, excluding Hawaii. For instance, in 2013 the median rental price in California was about $1240, which was over 50 percent above the national average rental price. Additionally, the cost of a typical home in California was about $437000 in 2015. This was more than twice the national average cost of a typical home.
What makes housing expensive in California?
Numerous factors have contributed to high rental prices in California. Here are the main reasons why the cost of housing in California is much higher than the rest of the USA:
Less housing in California coastal areas
Majority of the Californians prefer to live within the coastal regions (https://en.wikipedia.org/wiki/Coastal_California). However, most of the houses in the coastal areas of California are private homes, hence there is less housing to accommodate the population of tenants in the region. The fact that there are very few multi-family apartments within the California’s coastal areas has made tenants to compete for available houses, thereby pushing rental prices higher. Tenants who do not get housing in the coastal areas move to the neighboring inland California. This also causes rental prices there to increase.
Land is quite expensive in California’s coastal areas
The cost of land in the coastal region of California is quite high when compared to the rest of the USA. Therefore, real estate investors charge high rental prices for their property to recover money spent to acquire land. Remember that majority of the homeowners in the region use mortgages, which have to be paid. Other than paying mortgages, property owners also need to pay property managers, pay maintenance costs and make a profit on their investment.
High cost of building in California
High cost of building is another reason for high rental prices in California. Constructing a house in California is quite expensive when compared to other states in the USA. It is worth noting that the high cost of building materials and labor is actually the main reason for high rental prices. This is not only seen in the coastal region, but all of California. Moreover, government fees paid by property developers in California are much higher than in other states.
California finance structure does not favor residential development
It is worth noting that the manner in which local government’ finance is structured in California does not favor residential development. On the contrary, it encourages construction of commercial properties. Consequently, lack of incentives from the local government discourages developers to invest in residential housing. Many developers in California prefer building non-residential property in order to enjoy the available incentives from the local government.
Generally, the above are the basic reasons why rental prices are higher in California than in the rest of the USA. However, this does not mean that property management is not a lucrative business in California. A property manager in California needs to know that competition is very stiff in the region because tenants go for the best housing and property owners expect higher returns. Therefore, property managers planning to operate in California need to up their game in order to satisfy both tenants and property owners. They will be paid more than fairly if we consider the high prices of rent in the region. One company I’ve had the pleasure of dealing with in the Sacramento area is 2 Rivers Properties. If you’re looking for a property manager in this area of California I recommend contacting them and inquiring about their services.