Without the major drop in interest rates where would the real estate market be today? We definitely would not have seen the amazing housing comeback of the past two years. What will happen when rates eventually get back to 6 or 7%…will we see another drop in prices or will the economy be strong enough to handle it? One major concern is that while housing values are rising post-great recession, most people in the workforce are not seeing increases in pay and/or working frantic hours to make what they need. Also, the super wealthy are now the strongest they have ever been while the masses struggle. Some of these issues will not impact the westside nearly as much as other areas but I do think we may reach a point in the next few years where housing values may dip a little and stay flat for a very long time.
On the other hand, I cautiously say that as inventory numbers will continue to stay tight on the Westside thanks to Proposition 13 and many homeowners being locked in at historically low interest rates it will make it difficult to find an upleg property that is affordable.
Many Westside retirees have either paid off their home or owe very little and have no incentive to move out of the area since prop 13 protects their tax basis. They do have an exemption over the age of 55 to move and keep the tax basis, but it is tough to leave Westside living.
The Westside is land locked and with tight inventory you would think prices will constantly rise. However, with higher interest rates looming and the overall economy being held together by a string it may not work out that way…ahhh, if only I had a crystal ball.