Some factors influencing the current situation are particularly Californian in nature, and can be traced back to a general lack of available land in desirable locations. The cost of undeveloped land is prohibitively high, particularly in the Los Angeles and San Francisco areas. Kenny Slaught points to regular stalling of new construction projects, which results in many owners opting to stay put and renovate. Proposition 13, the 1978 amendment to California’s constitution, has made relocating a daunting choice. The law states that future property tax increases are capped at 2% based on 1975 assessments, but one exorbitant exception takes place when a sale is executed, and a property is reassessed based on its current sale value. Ultimately, yearly totals are determined by purchase figures that shift month to month, as demand in California fluctuates seasonally (most homes move in June with a small increase at year’s end). In addition, asking prices, interest rates, consumer confidence, negative equity status, quantity and quality of homebuyer jobs, disposable income, saving rates, and elements like major foreign investments affect the yearly totals.
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