Rising Assets Price in California in Times of Crisis

Price of any commodity or any article depends of demand-supply dynamics of that particular article and the usage frequency as well. Also the scarcities of the article lead to excessive demand for that good that result into higher prices. The income and living standards too have impact on the prices of the properties in market.

The state of California is witnessing a phase of high property prices even in the times of financial crisis. Analyst calls the current price levels of properties very high and it is true that prices are really higher than the normal prices if compared to other states of the US. There are many reasons behind these high prices. Those are as below:

Demand-Supply Equilibrium: Like all other commodities, demand and supply equilibrium plays a very role in the prices of properties cross the markets. in case of California, the demand supply constraint play huge role. The demand for homes in California is higher than the supply. Sometimes these demands seem to be artificial but the pressures from the demand side continue in the market. The result is that the prices of properties in California are very high.

Government’s Rules and Regulations: California is a coastal state. Maximum of the area are facing coasts. The rules and regulations for the construction of the home in the California are very restrictive and very can be able to meet all the regulatory and restrictive norms. This results into lower supply of homes in the state of California.

High Cost of Living: California has a very high cost of living. And the average income of resident of California is higher than many other states. Also the life style is somehow higher than many other states in the US. The high cost of living, high income levels and the higher living standards result into higher prices.

Industrial Region: California is currently house of many big industrial cities of the US. If said almost every city in California is an industrial and business hub in the US, would not be a wrong perception. Los Angeles, Orange City, Santa Barbara, San Luis Obispo, San Diego, Nevada, San Francisco and many more industrial cities are in this state. The industrial status of these cities pushes the average property price in these cities very high. And as result of these very high prices in these industrial cities, the median price of the home in California has gone up.

Migration: Migration to state California is very high. Because of better life style, finest coastal areas and many other reasons, a lot of high income retirees have made state of California their home. This also put pressure on the prices of the home.

All the above mention reasons altogether forces the market prices of home to a high level. Apart from these reasons, government policies, taxes and law and order too have impact on prices of the homes. California is relative a peaceful state and law and order conditions are good. This makes California better place to live. All these reasons together increase the median prices.

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