California Investors are running out of properties to buy!

Last year was Florida's year for Investors.  My area, the Palm Springs Valley, is definately very similar to the resort and retirement communities in Florida and I am seeing the trends mentioned below.

When the pattern became clear in the August data, it was easy to assume the Florida Phenomenon had simply moved west. There certainly were similarities. California, with its high housing prices, has virtually the same number of underwater homeowners as Florida, about 2 million. It also has as large number of investors, though mostly domestic, not foreign. Residential real estate investing as we know it today has its roots in the California-centered subprime crash of 2006 that ignited the national housing crash. Like Florida, California markets suffered peak-to-trough ratios well over 50 percent.

Yet Florida’s markets enjoy many similarities that don’t match up to California’s situation: large market share of resort and retirement housing, foreign investors, similar local economies.

However, there is one event both states have in common: dramatic draw downs in foreclosures resulting artificially from legislation or litigation. ForeclosureRadar reports September Notice of Defaults in California were down 20.7 percent from the prior month, and down 48.1 percent compared to last year.

“There has been speculation that the banks would rush to clear inventory before the CA Homeowner Bill of Rights takes effect in January 2013, causing an increase in the number of foreclosures. Clearly this is not the case as we continue to see the number of Foreclosure Starts decline. Notice of Trustee Sales remains basically flat, up 1.9 percent from the prior month,” reports ForeclosureRadar’s Susan Sierota.

California investors are more than accustomed to a long history of political intervention in the foreclosure marketplace in the form of moratoria, freezes and other games. If in fact the September NOD freeze is an early wake-up call illustrating how the new law will affect the marketplace, in the new year investors may find themselves hunkering down once again to survive for a double whammy: soaring prices and a trickle of supply.  (Courtesy of Peter Cook, Deep Pockets site)