A funny thing happened today when I called about a condo listing in Los Angeles – the property had just been sold. It’s unfortunate for me, because this particular one was selling at a good price, and was located pretty much exactly where I wanted to live, or at least as close to the ocean as someone with my income can afford. That’s not the only weird event…I’ve met three other people in the last few days who are looking to buy, as well. According to a CNNMoney.com article vultures are starting to swoop into the market, picking up places in bulk.
Home prices are off huge from 2006 highs, with more losses projected over the next year. For instance, the Los Angeles market is forecasted to decline another 16.8% through May, 2009. However, there are signs prices are finally reaching levels at which buyers are paying attention. According to National Associatoin of Realtors data, existing home sales in the West are up 16% since seasonally-adjusted volume lows in October, 2007. Sales volumes are increasing, but is this is a temporary surge, or the beginning of longer term stability?
There’s conflicting market information to consider. On the negative side, there’s talks of an increase in forced forclosures due to rigid contractual language in securitized mortgage instruments. This pretty much means that banks are not permitted to restructure more than a certain percentage of loans tied to securitized instruments, so borrowers are increasingly being forced to foreclose. On the positive side, there’s large pools of capital forming to exploit the housing crisis. For instance, the CNNMoney.com article cited earlier quotes a real estate investor as having just raised $250 million for vulture investing. This is becoming increasingly common, as institutions are raising vast sums of new capital to pick up bargain properties in bulk. This is usually the first step towards stability, so there may be hope on the horizon.
As far as timing when to buy, always consider the financial characteristics of your specific property. Just make sure your acquisition price is sufficiently low to yield required rates of return over your desired holding period. Simple, right? If not, visit SoCal Real Estate Advisors to learn more.
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