Some factors influencing the current homebuying situation are particularly Californian in nature and can be traced back to a general scarcity of land in desirable locations. Undeveloped land costs are prohibitively high, particularly within the Los Angeles and San Francisco metropolitan areas. Kenny Slaught points to regular delays in new construction, which results in many owners opting to stay put and renovate, because Proposition 13, the 1978 amendment to the state’s constitution, has made upgrading a daunting choice. Although the law states that future property tax increases must be capped at 2% based on 1975 assessments, the exorbitant exception takes place when a sale happens, and a property is reassessed based on current sale price. In the end, yearly totals are decided by purchase figures that vary monthly, as demand in California shifts seasonally (with most homes sold in June and a small push at year’s end). Yearly totals are also affecting asking prices, interest rates, consumer confidence, quantity and quality of homebuyer jobs, disposable income, saving rates, and elements like major foreign investments, and negative equity status.

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