Property Manager · Redlands, CA · Member since 2013 · 24 posts · 1 vote
Hi all!
I have a quick question. As many socal folks know, hedgefunds such as Blackstone have stopped being so active because the numbers no longer work. My buddy who was working there just quit because his transactions went from 5-6 purchases a day to maybe 1 per week. With this change, I would imagine that inventory should start to increase again, and folks will no longer be competing with hedgefunds for listings. Would this indicate a slower pace of appreciation than we've seen in the past year or so? Can we still expect to see property prices rising so quickly? Or do we expect to see prices start to drop now that the big guy just left? Any thoughts?
I wouldn't read into it too much. Its no surprise to anyone that cashflow is difficult to achieve in socal given the high purchase price of real estate.
To me, this means better market conditions for the individual investor.
We will likely see a slow down in the explosive appreciation we've seen the last couple years, but its still a hot market.
I see market drivers for a mini bubble that could pop, and I see plenty of people that aren't worried about a mini bubble that are ready to continue to buy. I think it's going to take a little longer before any sort of reliable prediction can be made. There have been too many simultaneous changes within a short period of time that make any sort of prediction near impossible.
Rising interest rates and prices should curb demand, instead they fueled a "quick before it's too late" mentality but no corresponding drop afterward...yet. Hedge funds and reduced buying increasing inventory should do the same, instead many in the first camp may continue to buy based on the fact that there are homes available now.
At the same time I've heard FHA has been tightening the belt on getting into homes as cheaply as before, this I think is a good thing but who knows how it will effect the market as a whole. Rents have gone up which may make some "investors" more willing to buy and take the edge off the Hedge funds reduced buying. I work in engineering and I'm seeing several developer clients dusting off projects they shelved in 2007-2009 and trying to get them going again, will new inventory drop the bottom out of prices or spur further purchases of nice clean new homes in desirable areas.
So until some of this volatility has a chance to stabilize, it is going to be very difficult to see where the market is trending.