Should real estate investors be stopped?
While not a popular topic amongst the "ranking" and "big money" investors in our local Santa Clarita market, this is something that is being talked about on the wire and worth discussing.
Buying a home today, in the greater Los Angeles Metro area, is not as easy as when there was a plethora of real estate inventory.
I am addressing those people that want to buy a home to live in. Is there any other type of real estate buyer in the real estate market today?
What investors are up to
How about the "real estate investor". They don't want to "live in" the home. They are buying it for other reasons. Option 1: They are either going to head out to a local Real Estate agent Experts office to see what homes they can buy to flip. Option 2: They are going to buy the homes, rent proof them, and get them occupied by a tenant.
Those two scenarios are typical today, with the weight being given to the investor that want's a return via "renting" a home - with the added bonus of having the investment's value increase over time.
It's a numbers game. It involves some "future real estate forecasting", coupled with a real estate "ROI" - a return on investment calculation.
It works, as seen by the present market. Realtors are also in the game and buying up investment properties too. So, we cannot do all of the finger pointing to the investment firms that have clients with Billions of Dollars to spend on real estate.
Does this help the local market?
Depends on what we mean by "help". If you look at housing prices, the sellers of the of the world are happy because prices have exceeded "forecasts" when it comes to how fast they are increasing.
This is because the real estate investors, for the most part, are waiving their "appraisal contingency", "inspections", "typical escrow time-frames", and only care about one thing. The numbers.
"Does it make sense, even if they are paying over list price, to buy the property to flip or hold and rent?"
If it does, they routinely waive their appraisal contingency, write an all cash offer, and go above the list price, offering the extreme within their penciled out "makes sense" scenario.
That action, beats out most of the "owner occupied" buyers of the world. Don't even get me started with Those poor souls that are using VA and FHA financing - anything less than 20% down is very difficult to get accepted, even by the most experienced and well plugged in real estate agent.
Back to the question of it this "helps" the local markets in the Los Angeles Area, "depends on who you are asking if it helps or not"...
For the investor - of course. They are "stabilizing" the local real estate markets.
For the real estate seller that wants their home to sell above the fair market value, absolutely, they are headed straight to the bank.
For the real estate buyer that is wanting to buy a home, move into that home, potentially raise a family in that home, beautify that home due to pride of ownership, and add value to the neighborhood, not so much :(
Don't kill the messenger:
Would it make sense, in an "over legislated" world, to have another piece of legislation to give "owner occupant buyers" the first shot at the homes for sale?
It's being talked about - what do you think? Please comment below - BE safe and talk soon.