The California real estate market has been a hot topic of conversation for years, with skyrocketing home prices and low inventory making it a challenging market for homebuyers and massively lucrative for sellers and investors. However, the market is subject to many economic and market factors that can influence its performance, including higher interest rates and decreasing home values after the latest real estate boom and era of cheap money temorarily halted or gone forever. In this blog post, we'll explore the historical appreciation rates of California real estate, recent trends in home prices, and how property tax experts can help homeowners manage their tax burden in a rapidly appreciating market.
Historical Appreciation Rates of California Real Estate
According to data from Zillow, the average annual appreciation rate for California real estate since 1990 is approximately 5.3%. However, appreciation rates can vary significantly depending on the specific location and type of property. It's important to note that past performance is not a guarantee of future returns, and many factors can influence the real estate market. When you remove the tertiary areas of California from the math and include only area with a high concentration of the population, the appreciation rate is between 6-7%.
Recent Trends in California Home Prices
The California real estate market has experienced significant growth in recent years, with home prices soaring by approximately 22.6% from June 2020 to August 2022, according to Zillow's Home Value Index. This translates to an annual appreciation rate of approximately 11.0% per year over that period. Home prices can fluctuate over short periods of time, and the market appears to have peaked in July and August 2022 and we are now noting consistent declines or at best, stabilization.
The Role of Property Tax Experts
Property taxes are substantial burden for homeowners in California, with assessments based on the assessed value of the property which is often closely tied to the sales price. When the real estate market is rapidly appreciating, counties love to collect more revenue due to increased property values, and this will continue into the future as each sale increases the property taxes on recently sold properties. Counties love appreciating markets!
This is where property tax experts, like AOPTA The Property Tax Experts, can come in. These companies specialize in helping homeowners manage their property taxes and may be able to help homeowners challenge the assessed value of their property or pursue other tax reduction strategies that can help them manage their property tax burden. However, the specific services and strategies offered by these experts may vary, and the effectiveness of these strategies may depend on the specific circumstances of each homeowner and their property.
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