When the Real Estate market took a turn towards recovery in late 2011, early 2012, everyone was excited to jump back in & make those purchases they had been sitting on the fence on for so long!
Traditional Buyer vs. The Investor - Round 2!
Traditional buyers who required loans to purchase homes found themselves in a steep uphill battle against the all mighty CASH investor who at the time was willing to pay more based on speculation & could close sweet painless escrows with virtually no contingencies in record timing such as 10 days or often even less!
Those market conditions made it very hard for the sweet young family or first time single college grad to compete! Many of them had no choice but to sit back & wait, or buy the finished product of these cash "flippers" at a premium. Fortunately for those who got in the Real Estate game early on when prices started to rise, they still got great deals and have now built considerable equity by now!
Traditional Buyer vs. The Investor - Round 2!
Fast forward to Summer of 2014.... Hungry cash investors need to curb their appetites as they are now LOSING to Mom & Pop in multiple offers! Owner users are now able to offer more than Mr. Cash who needs to maintain a certain profit margin to stay in the game.
In my local marketplace Sherman Oaks, California where price per square foot can easily be $400-500+, it's the financially stable family who saved up through the recession years and can now qualify for a purchase who are stepping up to buy their dream homes, or at least buying into their dream neighborhoods and taking those cosmetic fixers that the investors salivate over and making them their own to enjoy for years to come!
Traditional Buyer vs. The Investor - Round 2!
Affordability is way down and many people are fearful of a bubble and while I do not have a crystal ball, I can tell you from experience that this rise in prices is VERY different in my area than the "bubble" years of 2005-2007.
Back then if you could fog a mirror with your breath, you could buy a home with 100% financing! There was NO skin in the game! People were buying homes at a premium with no equity in them whatsoever!
Today's marketplace is extremely different and way more solid in my opinion. My deals are all closing with huge down payments, rarely even 20% in fact usually 30-50% down and many even all cash! There are mass amounts of cash out there and not from investors! Regular people who have made wise decisions and saved vigorously over the past decade.
In addition to the large amounts of equity in the properties, we have MUCH more conservative lending guidelines to further protect us from a large wave of foreclosures on the purchases of 2011-2014. Borrowers today must actually be QUALIFIED!
Traditional Buyer vs. The Investor - Round 2!
So although I do admit that we cannot sustain the prices continuing to rise at the pace that they have over the past 18 months, we are still way ahead of where we were during the last peak and in a much more solid marketplace today than years past.
I would love for inventory to loosen up some and allow for prices to flatten out a bit so we can enjoy a healthy market for years to come!!
If you need to buy or sell a home in the Los Angeles area, I'm always happy to help you any way I can!
