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10 Markets Where Wall Street’s Been Buying Homes

By on Jun 7, 2013 in Personal Investing, Project Financing | 3 comments

Phoenix, Ariz.

Metro Area: Phoenix-Mesa-Scottsdale, AZMonthly Rent: $1,067Median Home Price: $128,191Median Distressed Home Price: $110,892Distressed Home Price Discount To Peak: 57%Percentage of Sales That Are Distressed: 29%The desert metropolis was one of the first markets institutional investors flocked to, thanks to home prices falling to values worth less than replacement costs, a rising tide of foreclosure-spurred renters, and a supply of homes newly built in the housing bubble that required relatively little renovation.  American Residential Properties, started in 2008, was among the earliest institutionally-backed firms to buy and rent homes here. As prices have risen, many firms have stopped acquiring homes here. CoreLogic estimates that  institutional investors were behind roughly 25% of all sales in 2012.

Chicago, Ill.

Metro Area: Chicago-Naperville-Elgin, IL-IN-WIMonthly Rent: $1,512Median Home Price: $157,130Median Distressed Home Price: $101,399Distressed Home Price Discount To Peak: 61%Percentage of Sales That Are Distressed:  35%
“Chicago is actually one of the hardest hit markets in the country and nobody talks about it, but it was as hard hit as Phoenix, Las Vegas or Florida,” says John Burns of John Burns Real Estate Consulting, one of the few firms analyzing markets to see where investors can turn the highest profits in single family rentals. The Midwestern metropolis has experienced dramatic discounts on its distressed inventory, spurring firms from Blackstone to Five Ten Capital to buy homes in recent months. MACK Cos, a 16-year veteran of the single family landlord business, recently started selling portfolios of its properties to American Residential Properties as well.

Las Vegas, Nev.

Metro Area: Las Vegas-Henderson-Paradise, NV
Monthly Rent: $1,117Median Home Price: $109,080
Median Distressed Home Price: $103,470Distressed Home Price Discount To Peak: 67%Las Vegas welcomed a surge of institutional investors in the second half of 2012. They comprised an estimated 19% of all sales in 2012, according to CoreLogic, and caused REO (bank-owned home) prices to surge 30% in the fourth quarter compared to a year earlier.

Orlando, Fla.

Metro Area: Orlando-Kissimmee-Sanford, FLMonthly Rent: $1,208Median Home Price: $113,084Median Distressed Home Price: $103,419Distressed Home Price Discount To Peak: 58%Percentage of Sales That Are Distressed:  35%
Florida has the highest foreclosure rate in the country, thanks in large part to a long, arduous judicial process. Institutional investors have buying across the state but most notably in Orlando, Tampa, Miami and Jacksonville. CoreLogic estimates institutional investors were behind 18% of sales in Orlando in 2012.

Charlotte, N.C.

Metro Area: Charlotte-Concord-Gastonia, NC-SCMonthly Rent: $1,054Median Home Price: $155,503Median Distressed Home Price: $107,182Distressed Home Price Discount To Peak: 41%
Distressed Percentage of Total Inventory: 11%Institutional investors have been buying heavily in Charlotte since last year. Institutional investors accounted for an estimated 21% of all sales in the North Carolina metro area in 2012, according to CoreLogic.

Riverside, Calif.

Metro Area: Riverside-San Bernardino-Ontario, CA
Median Home Price: $171,689Median Distressed Home Price: $156,038Distressed Home Price Discount To Peak: 60%Percentage of Sales That Are Distressed: 43%
Institutional investors have been buying throughout the Golden State  for the past several years, many starting their acquisition efforts in hard-hit markets Southern Calif. markets like Riverside before expanding into Modesto, Stockton and Bakersfield. One of the industry’s so-called pioneers, Waypoint Homes, began its operations further north, in the Bay Area, in 2008.

Atlanta, Ga.

Metro Area: Atlanta-Sandy Springs-Roswell, GAMonthly Rent: $981Median Home Price: $121,156Median Distressed Home Price: $85,978Distressed Home Price Discount To Peak: 555Percentage of Sales That Are Distressed:  34%

Sacramento, Calif.

Metro Area: Sacramento-Roseville-Arden-Arcade, CAMonthly Rent: $1,312Median Home Price: $182,269Median Distressed Home Price: $160,212Distressed Home Price Discount To Peak: 61%Percentage of Sales That Are Distressed: 42%

Miami, Fla.

Metro Area: Miami-Fort Lauderdale-West Palm Beach, FLMedian Home Price: $127,166Median Distressed Home Price: $108,777Distressed Home Price Discount To Peak: 64%Distressed Percentage of Total Inventory: 39%Investors, including mom-and-pop investors and foreign buyers, have comprised about about half of all sales in Miami for several years now. CoreLogic estimates that institutions were behind about 30% of all sales in 2012.

Tampa, Fla.

Metro Area: Tampa-St. Petersburg-Clearwater, FLMonthly Rent: $1,210Median Home Price: $92,991Median Distressed Home Price: $89,376Distressed Home Price Discount To Peak: 53%Percentage of Sales That Are Distressed:  30%

    3 Comments

  1. At some point, the Wall Street companies that have bought thousands of houses will decide that the price has gone up high enough to make a decent profit and the will start selling. The current large scale acquisitions by large investment firms and hedge funds has created an artificial bump in price increases in the housing market. It has also created an artificial bump in the “scarcity” of houses. Add to that the support the mortgage market is receiving from the Federal Reserve QE bond purchases and you have an artificial market. The Fed will stop purchasing these bonds at some point, interest rates will go up and the market for funding mortgages will go very soft.

    That the housing market is recovering is a myth. These large investment companies have artificially supported the housing market. They are not in it for the long term, companies like Black Rock, who reportedly bought over 20,000 houses, look for quick turnarounds on the use of their money. When they get to the point that they want to sell, they will find that the mortgage market, because of the strict mortgage rules, will make it difficult for them to sell their huge portfolios. The housing market has a long way to go before it is back to “normal”. With the continued government interference in the market and the large investment funds buying foreclosed houses, it may never return to what used to be the “norm.”

    Doug Fullmer

    June 7, 2013

  2. I totally agree with you Doug…I’m seeing houses here in chicago that were selling for $10k to $20k just 3 months ago selling for $50k $70k and nothing has changed. Not for the fix and flip investor and wholesale it is a great time to make a killing.

    Will

    June 9, 2013

  3. Your comments explain a lot as I was wondering where all the foreclosed houses went and why they were off the books so fast. Thank you for the comments. They never learn never yet people have not caught on to how greed is running the country and how they will do anything for a buck.

    CJ COOK

    June 10, 2013

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  1. Wall Street Buying Adds To Housing Boom. Is A New Bubble On The Way? | Find the Capital.com - [...] Click here to see the Top 10 Markets Where Wall Street’s Been Buying Homes [...]
  2. Wall Street Buying Adds To Housing Boom. Is A New Bubble On The Way? | Triton Capital Advisory - [...] Click here to see the Top 10 Markets Where Wall Street’s Been Buying Homes [...]

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