California has long been one of the most desirable places to live and invest in real estate in the United States. With desirable weather, booming job markets, and overall high quality of life, demand for California real estate remains strong. As we move into 2022 and 2023, savvy real estate investors are looking for affordable areas in California that have potential for continued price appreciation. Factors like population and job growth, low crime rates, access to amenities, and reasonable taxes all contribute to making a location attractive for real estate investment. By carefully researching metro areas across California, investors can identify emerging real estate markets before they become overheated. Focusing on affordability while seeking out positive demographic and economic trends is the key to finding promising real estate investments in California over the coming years.
Sacramento and Central Valley offer affordability amid Bay Area spillover
As real estate prices in the Bay Area continue to rise to stratospheric levels, more buyers are looking to California’s Central Valley for relative affordability while still remaining within commutable distance of Bay Area jobs. Cities like Sacramento, Modesto, and Stockton are benefiting from this spillover effect. The Greater Sacramento area in particular is poised for real estate investment growth, with its population increasing by 1.5% annually. Major employers like Apple, Amazon, and Micron Technology have located offices in Sacramento, diversifying the economy beyond just government jobs. Investors should look at Sacramento neighborhoods like Oak Park, which is undergoing revitalization yet still has median home prices around $350,000. Further south in the Central Valley, Bakersfield is another affordable option that offers great value for real estate investors, with median home prices just over $300,000.
Inland Empire and San Bernardino County rising in Southern California
Similar to the dynamic occurring between the Bay Area and Central Valley, Southern California real estate markets like Los Angeles and Orange County have become increasingly unaffordable for many homebuyers. This is leading buyers to look inland to Riverside and San Bernardino Counties, known as the Inland Empire. Excellent freeway access makes the commute to job centers like Los Angeles and San Diego manageable from these locations. Real estate investors should consider cities like Rancho Cucamonga, Ontario, and Temecula in Riverside County which offer great amenities and schools at a more affordable price point. In neighboring San Bernardino County, the city of Victorville warrants a look, with median home prices around $375,000 and its strategic location near logistics hubs. The Inland Empire offers all the upside of Southern California real estate with greater affordability and room for price appreciation.
Secondary markets in San Diego County poised for growth
Within Southern California’s desirable coastal areas, prices in core markets like Los Angeles and San Diego are increasingly unaffordable for middle class homebuyers. This is leading buyers to consider secondary markets within commuting distance that are positioned for real estate investment growth. In San Diego County, cities like Chula Vista, El Cajon, and Escondido offer much lower price points than coastal cities like San Diego and Encinitas, with median home prices between $600,000 and $700,000. These inland areas have historically lagged the coast but are rapidly developing more amenities and middle/upper-middle class appeal. The San Diego Metro area is still adding over 30,000 new residents per year, and many of these new residents will gravitate towards secondary markets as the coast becomes overpriced. Savvy real estate investors can target these emerging markets before appreciation really takes off over the coming years.
California offers many promising real estate markets once investors look beyond the overheated coastal cities like San Francisco and Los Angeles. Locations benefiting from spillover like Sacramento and the Inland Empire, as well as secondary markets within major metros, provide the best opportunities for appreciation over 2022 and 2023. Focusing on affordability and positive demographic trends is key.