I've not read anything that indicates what percentage of sales are going to investors. I know in the low priced areas its a fairly high percentage. But are these "investors' factoring in rent declines? I remember in the early 90's a few so called investors I knew got caught by falling rents. They bought foreclosed homes as rentals but factored their numbers on 1990 rents. Unfortunately 1993 rents were quite a bit lower and those guys ended up losing quite a bit of money.
I've watched a few homes near me sell to investors. All of them have "for rent" signs in the yards (well, one did get rented). The rents they are asking are delusional in my opinion. They might have gotten those numbers 3 or 4 years ago but in today's flooded rental market they have no hope. The one house that did rent sold for about 40% less than I would have expected it to. That guy is golden (and I'd love to know how he got that house for the price he did!). But the others are in a world of hurt if they need those rents to cover the monthly nut. The house next door I a assume went to investors. They closed in mid January and have not moved in yet. They have been in it painting for months. I think they must be painting it with artists brushes or maybe a Q-tip. The house was is in good shape when it sold. All in needed as a cleaning and a stove and it could have rented. Now I know what it closed for and I have a good idea of what it can rent for. Unless they put a helluva down payment there's no way that property will generate any profit.
In Orange county rents have fallen nearly 7% in the last year. I fully expect to see at least a 20% decline in the price of rentals in the IE over the next couple of years . I would not at all be surprised to see that number hit 30% or more. How many of these new "investors" have factored that into their P&L equations?
12 comments:
what is the address of that house that sold well under your expectations?
You have my email if you would rather keep it on the DL.
have you checked out Housingtracker.net lately, the typical $10,000 per month drops seem to have ended in Riverside County.
In the last three months, the drops are as follows:
Jan. 2009 $222,000 average median asking price, Feb 2009 is $219,000 and March is only $218,000.
This low end stabilization seems to be happening. X, do you think this a temporary halt to or do you see the low and median priced houses stabilizing in the low $200,000's?
I think the low $200,000's is a bit high, but maybe its affordable for most..
Although I did just buy one in Temecula for $238,000, but I really needed a roof over my head, and I've had it with landlords. Even if it drops to $150,000, I answer to no one and I don't need permission to do any repairs or upgrades.
I'm hoping that the price stabilization is just temporary because of the foreclosure moratorium that was place until march 6th. But now I see that banks are listing the REOs again. Once the REOs start pouring in price will drop further. I saw around 4 or 5 REOs listed today in the IE. It's starting again.
Don't forget seasonality. Prices are upward biased in the spring.
i know that we have brought up the rise of crime due to the economy and as u know i posted a few days ago that I was feeling an increase , personally. as u may recall, My windshield was smashed by a beer bottle, my rims were stolen at the mall and my sons ipod got jacked (all within a couple of weeks) so i just had to add that the night before last, my oldest son was walking into dennys to meet some friends a car pulled up and 4 guys jumped out and demanded that he give them all of their money. (he actually ran and escaped, but still... )anyhow, this is four criminal acts within 3 weeks !!!Im not leaving the house again...
What city do you live in jennealee?
Maybe I should try to avoid that city...dang hope you guys are ok.
Personally, I have not seen any uptick in crime but I'm sure it's on the rise. It always does during bad times. But personally I've not seen any difference yet.
As far as prices goes, housing tracker tracks listing price and not selling price so keep that in mind. Prices are leveling off a bit or at least the fall is becoming less steep. That's expected. The major price declines should be behind us plus with spring the prices are likely to stabilize a bit. But with the employment numbers getting worse and worse it's really going to put pressure on the prices. I think most of the nicer areas still have 20% on average still to go. The other areas like Perris and such are probably bottomed out or very close to it.
x - where do you think san jacinto is with respect to bottom? thanks
im in san antonio in a guard gated community which is very safe...its just when we go outside these walls...
Osa, I think San Jacinto, Perris, MoVal, Hemet, Winchester, Wildomar, Lake Elsinore etc are pretty darn close to the bottom. Maybe even at the bottom in some of the areas. You can easily pick up a home in those areas for less than what it would cost to rent a similar house. There's just not much pressure on the prices out there any more. You can buy nice starter homes for $150k. That's a monthly payment of about $1200 (PITI), give or take $100.
I am buying but I am very selective, I give myself a positive cash flow of around 30-40% if the present rents to make sure that I can weather the down side should rents cave in.
Corp. Apartment complexes are getting hammered as people move into rental houses.
I feel where ever you can get homes below $50 a sq/ft and have a solid cash flow all is good. If it tanks bad enough to get me then it really won't matter much as we all will be eating out of trash cans by then.
RJH
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