Not surprising since dopey hedge funds flooded the market with homes they overpaid for and putout for rent instead of re-selling.The median rent for single family homes in LA fell 4.1 %last quarter from last year at the same time.
For the past three years they have been swarming over the hardest-hit housing markets, buying distressed properties in bulk and pushing prices higher by double digits. The idea for these investors was not to buy and flip, but to hold and rent. Now some investors say that they have priced themselves out of the market.
“Higher prices are reducing returns on investment, and investors are responding by cutting back on their purchasing plans until conditions sort out,” said Chris Clothier, a partner in MemphisInvest.com and Premier Property Management Group, which commissioned a national survey of investors conducted by ORC International. “Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good deals on distress sales.”
Nearly half the investors surveyed said that they planned to cut back on purchases of homes in the coming year; in a survey last August, just 30 percent said they planned to cut back. Only 20 percent of investors said they plan to increase purchases, compared with 39 percent who said they would last August. All this could have a significant impact on the housing recovery.
Bargains are drying up when it comes to buying foreclosed properties. The number of foreclosure sales in the first quarter of this year fell 22 percent from a year ago, according to RealtyTrac, a real estate website. The number of short sales, when the home is sold for less than the value of the mortgage, also fell, as rising prices provided less incentive for banks to agree to such deals. Some claim banks are actually holding onto repossessed homes, waiting for prices to rise higher.
Investors accounted for 19 percent of home sales in April, according to the National Association of Realtors, down from 24 percent in all of 2012. Investors include individual buyers as well as large hedge funds, but the hedge funds have been getting much of the attention, credited with juicing prices in the hardest hit housing markets like Phoenix and Las Vegas. Their so-called REO-to-Rent strategy (Real Estate Owned-to-Rent) has evolved into a new asset class, with two of the companies that engage in the practice going public this year as real estate investment trusts (REITs).
Read more on Hooray- hedge funds are stepping down from buying real estate…
According to the latest Case Schiller index. In ca. we saw the lowest rise in home sales as compared …