Location, Location, Location: CA Home Mortgage Matters to Consider

By Jonathan Haeber
CMR Columnist

In the world of home mortgages, a determining factor in the price of a home is location. We'll see why and how this will affect your decision to purchase a home.

California home prices depend a great deal on location. Ever since the population explosions of the Gold Rush, the dust storms of the Great Depression, and the boom of Hollywood, the economy of the state has grown progressively stronger. As the War Department increased funding to bases and military research in California, it was only a matter of time before people flocked to the Golden State.

Today, a diverse work force, cutting-edge research institutions, and an ideal position for trade with China makes California the economic heartland of the U.S. The state has experienced so much success, if California was a country, it would be the sixth wealthiest country in the world.

Population + Success = Demand for Homes

With economic success comes population. With population comes demand for real estate. Even today, California hosts some of the highest median home prices in the nation. What makes this location so desirable? And is it worth taking out a California home loan instead of a much lower home mortgage in another state?

Consider the Bay Area. The reason San Francisco has the highest median home prices is because there is nothing left to build on. San Francisco has the densest population per square mile--even denser than New York. The little land left to build on in San Francisco is either too unsafe because of earthquake hazards or is protected (as the case is with Presidio National Park and Golden Gate Park).

The lack of land to develop has led to ever-popular condo conversion--San Francisco is the Western U.S. Capitol when it comes to condo conversions.

Why California Home Mortgages Are So Expensive

Any location with relatively little space, high wages, and good living conditions should command higher prices. A moderate climate, ample recreational opportunities, bodies of water, and convenient transportation will lead to even higher home prices. In parts of California, all of these factors contribute to the value of the real estate. Though it may be extremely expensive to live in the state, there are good reasons people pay these prices.

About the Author
Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home, and took a self-taught crash course in home mortgages.

© 2006 CMR. All rights reserved.