Skyrocketing inflation. Sky-high taxes. An increasing unhoused population. Unaffordable housing prices. A shift in work-life balance. Industry titans evacuating and relocating.
This is the reality California has faced over the last few years, and we’re the first to admit it: On the surface, it sounds borderline dystopian. All of these factors have culminated in a continuing phenomenon being referred to as a California Mass Exodus.
Mass exodus? Sounds scary, right? Almost like the sky’s about to start falling? Well, that’s what some people want you to believe, but it has created unprecedented opportunities in the real estate market that mbanc’s DSCR loans help capitalize on quicker and easier than ever. Learn more in our blog:
Understanding the California Mass Exodus
A lot has been said about this phenomenon, with some criticizing it as a sensationalized narrative.
However, following the recent pandemic, it is undeniable: California experienced significant emigration to states like Texas, Montana, Arizona, Florida, Virginia, and Washington and ranks second in the country for outbound moves.
In fact, between 2020 and 2022, California lost over 352,000 residents, and San Francisco and Los Angeles ranked first and second for outbound moves nationwide. Several factors have contributed to this, like rising crime rates and an increasing unhoused population.
Add to that a housing shortage due to a lack of available land to build and a growing concern for the environment that has resulted in developers having to pay more, and you have the perfect storm.
Essentially, many Californians felt priced out of the state, especially as economic uncertainty swells. However, there is a silver lining: As more people vacate the state, housing prices continue to drop, resulting in a prime opportunity.
“There are a lot of reasons people are leaving California,” Desh Weragoda, mbanc CTO, explained, “like the cost of living, taxes, shifts in work-life balance, opportunities for remote work, inflation, and sky-high housing prices. But it’s not all doom and gloom. As droves of people leave California, this presents a unique opportunity to invest in real estate.”
Let’s explore the unprecedented investment opportunity the California Mass Exodus has created for people like you.
The California Mass Exodus as an Advantage for Buyers
The California Mass Exodus has impacted virtually every aspect of life, and while some people bemoan this trend, it has also created unexpected opportunities.
In 2022, the California Association of Realtors reported that housing affordability dropped to a 15-year low. Iconic cities like San Francisco, Sacramento, and Los Angeles were especially affected as home sale prices experienced a drop of over 5%.
In San Francisco alone, home prices plunged 8.2% from their peak values. Still, this is not exclusive to California. Cities nationwide have experienced a similar decline, but there is nowhere in the nation where it is more prevalent. For context:
Out of the nation’s top 20 metros experiencing this drastic decline in home prices, 7 are in California, accounting for 35% of these cities. In 2023, single-family home sales are projected to decline another 7.2%.
“This trend of cooling markets in California isn’t exactly a shock,” Desh continued, “After all, California was one of the most expensive markets in the country, and it only got more expensive. When you pair that with rising inflation, this kind of thing is bound to happen.”
Here is what is important to consider: This drop in demand will continue to have a ripple effect on home prices, as experts forecast that they will drop 8.8% in 2023 to a median of $758,600. As sellers struggle, buyers can flourish.
“The changing reality of the housing market in California means sellers must adjust,” Desh said, “They have to adjust to a supply that outstrips demand, less competition, and far fewer homes selling above asking price.”
What does this mean? The market will finally be accessible again to people like you, yielding a once-in-a-lifetime investment opportunity. Eventually, the housing market will restabilize and recover, meaning your investment will appreciate.
While this may seem like a long-term gain, consider an industry that has only blossomed as others faltered: tourism. California is still California, and people the world over want to experience everything this world-renowned state has to offer.
Experts project tourism will increase by 8%. In 2022, approximately 259.8 million people visited California. And in 2023, this figure is expected to increase to 281.5. Demand will only continue to rise, and the daily rate of California Airbnbs will rise along with it.
By taking advantage of these record-low prices, you can mine immeasurable gold out of the Golden State as your short-term rental pays for itself and gilds your financial future.
Capitalize on the California Mass Exodus with a DSCR Loan
A cooling housing market has generated once-in-a-lifetime real estate investment opportunities. California housing prices are reaching record lows while tourism to the state continues to climb. Missing out on these opportunities is like having a crystal ball and refusing to buy stocks in Apple or Google forty or twenty years ago. It borders on financial negligence.
To position yourself for unimaginable success, talk with our team about how our non-QM DSCR loans can finance your short-term rental in California. With mbanc, you don’t have to worry about income and liabilities. You can just sit back and watch your investment grow.