Homebuyers left out in the cold in California real estate. Consider a game of musical chairs, where the chairs represent single-family residences (SFRs). In this game, the music plays and everyone dances around, looking for a chair to snap up at the right moment. But there is a nasty twist. Some players are grabbing chairs before the music stops, taking them into another room where they remain unused, along with other chairs that never even made it to the game. When the music stops, many players are left standing. Only a few were able to make a mad dash and snap up a chair within reach.
This is the current climate for SFR real estate in California. Many future homeowners are left standing around looking for a home, but there is little inventory to be had for those intending to actually put the property to use.
There are five categories of players that purchase SFRs in the California multiple listing service (MLS) market:
- homebuyers, the primary players, who are committed long-term and have agreed to occupy a property;
- investors, fundamental long-term players, who purchase one-to-four unit SFRs to hold as income producing investments, and a profit on ultimate resale during retirement;
- building contractors, who are involved in renovation, adding value to uninhabitable property in order to profit on the resale;
- local government agencies, that buy up the foreclosed and vacant properties under a federal program designed to renovate a property in order to maintain neighborhoods and avoid vacant nuisances which depress neighborhood values and attract crime; and
- speculators, (also known as dealers, flippers, hit-and-run artists, sandwichers and momentum traders) who are short-term passive owners, who do not renovate or improve but treat the property as inventory to be sold for a quick profit.
Courtesy of First Tuesday..read more here http://tinyurl.com/y95sr79
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