New Year’s Eve is just around the corner, and as all throughout the country cities and towns are planning celebrations, people are deciding if they should go out or stay in and avoid the crowds (and watch college football), and analysts are enjoying their favorite thing: looking back and talking about trends. Do these guys know how to party, or what?

So, here at Socotra Capital, your California leader in equity-based hard money loans, we want to take a look at what happened this year in California. These are the stories that mattered to the residential rehab, fix-and-flip, and commercial real estate communities this year. These 2015 California real estate developments are not just what had the biggest impact on you this year, but the ones that will affect your business moving forward.

Drought

This is the biggest story of the year for California, and for most of the nation. This was the year that it became official: we are in the middle of an enormous drought. While the wild effects of El Nino will change things this year (and make sure you prepare your fix-and-flip for it!), that won’t change the underlying structure of the drought, and things will most likely be back to the new normal by next year. What this means for real estate professionals is that they have to flip houses in a way that appeals to buyers concerned with water conservation. This includes:

  • Low-flow faucets/showerheads
  • Low-flow toilets
  • Eco-friendly dishwasher/laundry
  • Replacing yard with stones or other non-water-intensive plants
  • Rain barrels

None of these are onerous, and all will improve not just the value, but the sellability of your property.

Tech Moving South

It sounds like a neo-Grapes of Wrath, with tech moguls loading smartphone onto their wi-fi hotspot wagons, painting it with a goofy start-up name (“Sto4m- The Uber for Weather!”), and heading for parts south. And in a way that’s what is happening. With real estate prices in the San Francisco Bay/Silicon Valley market so high, tech companies keep expanding, and many startups are moving toward the relatively inexpensive environs of Los Angeles and Orange County. There have always been hardware and high-tech companies in the area, but this is the rise of Internet 2.0 in the area, and it is transforming parts of the city. It’s a great time to buy in these rapidly-improving areas.

Falling Unemployment

California was one of the hardest-hit states by the Great Recession, and it continues to pull itself out (and we’re happy to say that residential rehab helped lead the turnaround). Its unemployment rate keeps dropping, and as of this writing is at 6.3%, slightly higher than the country as a whole, but still considerably below where it was even last year (in 2012 it was still at 10.5%). Now, around the state it is still mixed. The San Francisco area is under 4%, while in Los Angeles it is over 6%. This means that prices are rising, and will most likely continue to rise, but there are still some areas where an fix-and-flip professional can get in, buy, and wait for the rising tide to continue to lift their boat.

Drop in foreign investment

This is a potential storm cloud, but it really could be seen in a couple of different ways. Foreign investment in the housing market helped balance through some lean years, and now that it is beginning to pull out, some analysts think that the market will slump again. Others believe that this is a sign of a strong economy, where large investors can’t hoover up a bunch of property, sit on it, and then sell. This means that there is more room for the smaller professional to buy overlooked and distressed property and continue to build.

In short, 2015 was about improvement. It’s too early to say that we have the Recession totally behind us, and too early to know the impact of the drought, but regardless, there is always room for a smart professional to buy property, rehab it with the help of a hard money loan, and make a profit in the next year. Connect with Socotra, California’s leading equity-based lender, to see how we can help you.