California has been one of the most popular places for real estate investment in recent years. The state’s hot housing market, booming tech industry, and overall strong economic growth make it an attractive option for investors looking to purchase investment property in 2020. In this article, we will take a look at some of the best cities and regions in California for real estate investing, as well as factors that contribute to the profitability of investment properties in the state. By analyzing market trends, economic data, and demographics, investors can identify lucrative opportunities and make informed decisions when selecting the best investment property in California in 2020.
Bay Area and major metropolitan regions see continuous price appreciation
The Bay Area, including cities like San Francisco and San Jose, has seen rapid home price appreciation over the past decade, driven by the booming tech industry and influx of high-income workers. Median home prices in core Bay Area counties surpassed $1 million in 2019. While price growth has slowed recently due to COVID-19, the region remains attractive for real estate investment given its strong economy and desirability. Other major metros like Los Angeles and San Diego also feature solid job growth and continuous demand that supports rising property values. Investors should target investment properties in core urban neighborhoods and suburban cities that appeal to the region’s high-earning professionals.
Sacramento and Central Valley provide affordable cash flow
For investors focused on cash flow, Sacramento and Central Valley cities like Fresno and Bakersfield offer relatively affordable home prices and rents. With median prices between $300,000 to $400,000, these markets allow investors to generate higher rental yields. Appreciation potential also exists as buyers get priced out of coastal cities and move inland. Investment property types suitable for this region include single-family rentals, multi-family properties, and flips that target first-time homebuyers.
Strong demographics and lifestyle appeal will continue to drive housing demand
California has favorable demographics that will continue to fuel real estate demand. The state has a fast-growing population and relatively young homebuying cohort compared to national averages. California also enjoys strong international migration with its global economic connections. For retirees and remote workers, cities like Palm Springs and Santa Barbara offer appealing climates, natural amenities, and lifestyle perks. Real estate in these smaller markets can generate passive income while also benefiting from price appreciation stemming from the area’s desirability.
In 2020, attractive investment options exist across California real estate markets. While coastal urban centers remain popular despite high prices, inland metro areas and smaller lifestyle-driven markets also present opportunities. Considering local economic conditions and demographics is key when identifying the best investment property in California.