Rental Investors On Hunt

by Julie Schmit
USA Today

Major real estate investors are buying fewer homes in some hot markets while expanding in others as they race against rising prices to turn more distressed homes into rentals.

Investor interest may be close to peaking in some California markets where prices have risen sharply because higher acquisition prices cut finacial returns, said John Burns, CEO of Burns Real Estate Consulting.

Foreclosures
Home shoppers are now seeing the multiple offers, bidding wars and shrinking supplies of homes for sale as investors swooped in.

Major institutional investors are amassing a $10 billion pool of money to pursue the single-family rental market, JPMorgan Chase estimated in a recent research report.
They're betting that they can get distressed homes on the cheap, fix them up and rent them out, often to families who lost homes to foreclosure, and make money on home price appreciation in a few years.
The companies generally seek three-bedroom, two-bath homes in the $100,000 to $125,000 range that can rent for more than $1,000 a month, analysts say.

BIG MILESTONES FOR THE FORECLOSURE MARKETPLACE

On November 26, 2012, ForeclosureRadar recorded its millionth California foreclosure sale since we began collecting the data in January 2007. 

While the foreclosure process can be painful and unpleasant, this milestone also means a million underwater homeowners have escaped a prison of debt. 

In addition, the California real estate market has made real progress towards eliminating some of the trillions of dollars in excess mortgage debt accumulated nationally during the bubble years. Rather than being the problem, foreclosures are part of the solution and have helped the California housing market make steady strides toward recovery.

Santa Clara County Foreclosures

Morgan Hill Housing Data
Median House Value: $673,400
Average Age: 28
Owner-Occupied: 76%
Median Rent: $1,401
Single Family: 76%
2-4 Units: 6%
5+ Units: 8%

Morgan Hill, California foreclosure listings from November, 2011 to November, 2012.

Foreclosure Filings: California > Santa Clara County > Morgan Hill

Foreclosure Filings—Notice of Default filings are the first step in the foreclosure process.

California Foreclosure Inventory Continues to Decline

November 2012 California foreclosure inventory—the total of Preforeclosures, properties in foreclosure that are Scheduled for Sale, and Bank Owned properties (REO)—fell 7.6 percent from the prior month and is down 31.8 percent compared to last year. While the November decline in inventory is not an unusual event, the significant decline in foreclosure inventory over the past year has contributed to what some are calling an “inventory crisis” of total homes for sale.

The November foreclosure inventory shortage is partially due to the jump in California Foreclosure Cancellations. Cancellations were up 4.7 percent from the prior month, up 69.9 percent in the past two months and up 34.7 percent compared to last year. In taking a closer look at the reason for cancellations, it did not appear the majority were due to statutory time frames or filing errors, but were more likely due to short sales or successful loan modifications.