"Down about 40%" - Shark Tank's Kevin O'Leary discusses three issues about California's current real estate market 

According to the Shark Tank investor Kevin O'Leary, the real estate market in California is in trouble, and there is nothing anyone can do about it. He says that they are facing an affordability crisis that makes a common person unable to buy a house in the state anymore.

Kevin claims that he is an avid investor in properties and thus, follows the news "like a hawk" and concludes that what is causing all the havoc. He says that three factors are driving up the costs and the insurance premiums on the properties.

The Shark Tank investor explains that it is not just California that is under the radar of these trio affecting the market, but Texas and Florida have joined the club as well.

Revealing, he said,

"There's three issues now. Obviously, mortgage is number one, it always has been in driving decision purchase. But there's two other things that have come out of nowhere, particularly in places like California. They are Insurance and taxes. So you, you combine the insurance cost with the taxes plus the mortgage, affordability is down about 40%."

Continuing, he added,

"In other words, you gotta buy a house with 40% less square footage and pay the same amount for it. That means that classic three-bedroom, 2,500 square foot deal that you could pick up for $1.2 million, forget about it. You're living in a trailer home now for the same price it cost in California. That's a big part of the market. Same issues in Texas, same issues in certain parts of Florida."

Shark Tank investor Kevin O'Leary comments on the rising house prices in California

Kevin O'Leary, the Shark Tank investor, says that there are three drivers of affordability, and the first is mortgage. The rates have spiked recently, which has directly affected the buying cost.

The second one is insurance. Earlier, it was thought of as a precautionary process, but now it has become a deal-breaker in places like California.

The state has seen a lot of natural disasters, such as wildfires and floods, and earthquakes. And that is why companies are hesitating to insure properties in the area as they are at a larger risk than at any other place.

"I watch this like a hawk 'cause I am a big real estate investor. It's ground to a halt while these issues are resolved. But insurance in California, forget about it. I mean, literally. If it isn't an earthquake, it's flooding, and now you've got fire. You got fried, drowned, and shaken there, and nobody wants to actually ensure that."

Last but not least, another burden comes from taxes. As if insurance costs and mortgage were not touching the sky already, property taxes chimed in with their share, making it impossible for an average American to buy a property in California these days and age.

The Shark Tank investor feels that these three factors have created a hostile environment for the buyers.

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Shark Tank season 16 episodes are available to stream online via Hulu.

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