Sunday, June 29, 2008

Perhaps some hope on California's Housing Market

According to the California Association of Realtors, existing home sales in May were up 18 percent from a year earlier. At the same time, my colleague Delores Conway is showing that the gap between house payments and rents is returning to its historical norm for Los Angeles.

But perhaps more interesting are anecdotes I heard at the Pacific Coast Builders Conference in San Francisco last week--buyers are going on REO "bus tours" and purchasing multiple homes--with their own money. It is not all all clear how widespread this phenomenon is, but if we see large numbers of vultures in a market using equity to sweep up REO properties and short sales, we have seen the bottom of the market.


Anonymous said...

According to Ms. Conway's work, how long will it be before rent and house payments are back in line? Does she anticipate overshoot?

I know a handfull of people that formed investor groups at the beginning of the slide with the intention of scooping up properties. Let's assume though that we could get detroit level prices in places like the Inland empire, in the $20-50,000's. This probably won't happen for quite a while. In the mid-range areas, I'm sure if we look closely, we'll see the carnage is still well under way, and at the high end, it's just beginning.

What of large companies that step up to buy large swaths of properties from the banks, who are really not geared to manage them? Doesn't this seem a likely next step? The banks are holding a tremendous amount of properties currently, that they are trying to one-off with little success.

At the same time, we have the rise of companies like "Penny Mac," founded by the old number 2 at Countrywide, who are buying up half priced debt. They're making noise as if they will be renegotiating with borrowers and then servicing the debt, but there is just too much downside risk in this for it to be a genuine effort.

Uncle Billy Climbs Mt. Pelerin said...

This "national investor" might be one of the new breed of super vultures:

davelindahl said...

Dave lindahl scam review that the real estate investment that involves purchasing a less comfort property, well enhance its value through physical updates and then promote it at a higher rate than the purchase rate can fill your pocket tremendously.