Southern California leads the nation with three of the four most overvalued real estate markets. According to Trulia, a real estate informational site, it is estimated that prices in the Orange County market were overvalued by as much as 17 percent in the second quarter of 2014, while Los Angeles county and the Inland Empire were overvalued by 15 percent and 13 percent respectively. The good news is that these numbers are far below those of the peak market in 2006 when Orange County was 71 percent overvalued, followed by Los Angeles County at 79 percent and the Inland Empire at 92 percent.
While year-over-year appreciation is expected to slow considerably, thereby slowing the overvaluation percentage, incomes have not kept pace with appreciation and the affordability rate in these overvalued markets will continue to decline. In response to this lack of affordability, the Strategic Growth Council, which is comprised of various California agencies, has issued draft guidelines for the Affordable Housing Communities program, as well as a program aimed at sustainable development. The drafts are now available for comment HERE. The state will hold workshops throughout California to obtain public comments on the draft guidelines with a workshop in Los Angeles on October 31, 2014. The draft guidelines are scheduled for adoption on December 11, 2014. For more information, contact Larry Brose, Vice President, Investor Relations and Business Development.