Sound Real estate information for the mid-peninsula of San Francisco: the Silicon Valley.
Sunday, June 5, 2011
Real Estate Investors Compete Against First-Time Homebuyers.
With regards to this recent blog about investors competing against would-be homebuyers, it has definitely been my experience that this is taking place - in a large percentage of the offers I have seen recenty, especially in the low price ranges. One sure sign: in about 30 to 50% of the cases, the winning offer was all cash.
This is absolutely prevalent where a condominium is offered for sale, and more than 15% of the units in the complex are deficient in their dues payments to the association. In that case, I do not know of a bank that will lend money to buy the property. Only a cash buyer can puchase. Why buy in such a complex, with a fair risk that for lack of funds there will be deferred maintenance all around? Because the rental income is worth it. And later on, when the real estate market improves, valuations will bring in more gains. It is clear to me that many (real estate) investors have confidence in the Valley.
But I have also seen it in regular sales, where the dues problem does not exist. With prices very low now in the Valley, investors have been moving in; this has been taking place for at least a year in my experience, - and a little more for houses. Lowest prices were mid-2009.