By Tom York / Times of San Diego / August 22, 2024
There’s been lots of news about outside investors roiling the market for single-family homes in San Diego, snapping up an ever larger portion of properties that come to market. The trend especially focuses on two New York City private equity firms, Blackstone and BlackRock.
Well, now we have added evidence about private investor activity.
According to residential real estate web portal Refdin, investors were quite active in San Diego’s residential housing market this past spring.
According to the Redfin report, mom-and-pop and institutional buyers purchased nearly one-quarter (23.7%) of San Diego homes sold in the second quarter. …
Redfin economist Sheharyar Bokhari said one reason investors “are coming out of hibernation is to take advantage of robust demand from renters.” “Elevated home prices and mortgage rates have pushed homeownership out of reach for a lot of Americans,” she said in a press release, “which is fueling demand for rentals. Investors, many of whom can afford to pay in cash to avoid the sting of high mortgage rates, are cashing in on that demand.”
For the balance of this article and more, please go here.
A mom and pop institutional investor? Redfin says,
We define an investor as any institution or business that purchases residential real estate, meaning this report covers both institutional and mom-and-pop investors.
Investor purchases of U.S. homes rose 3.4% year over year in the second quarter.
The Redfin report has a bit better context than the stand alone TOSD headline.
https://www.redfin.com/news/investor-home-purchases-q2-2024/
Firstly, we need to come up with a new moniker for “mom and pop” investors. This makes them sound like they are that cute little couple with 2.5 kids who bakes pies for all their new neighbors, but in reality these are shrewd business people, probably incorporated, maybe have multiple investors in their dealings, and who own more than 2 or 3 dwelling units. There is nothing mom and pop about flippers, couples who buy up apartment complexes and STVR them, or buy them and double the rent right away. They vultures just like the big guys.
And this is insane “Buyers would have to earn an annual salary of $274,000 to afford that median-priced home on the market, which was $1,050,000 when the numbers were compiled. The mortgage payment with a traditional down payment of 20% would be $6,850 a month.” Who even has 20% socked away for a down anymore. Unless you’re rich or have rich benefactors, most people are luck to save 1-2% these days. And even with 20% who can afford almost $7k a month????
I’m so disgusted with the state of real estate in the city and even country right now and there really feels like there is no way to stop the insanity. Money always wins. We should also stop fooling ourselves with the supply and demand argument because building more will not stop this price gouging. Remember investors will own the new ones too. It’s not like developers and investors will be giving people a break. Why would they? It costs a ton to build nowadays and investors are only in the game to make money, not be altruistic housing suppliers.
Whether it was an investor purchaser or not, being on the cusp of declining interest rates, the housing market was/is going to heat back up either way IMO. And the report was about SFR’s and says investor purchases of multifamily properties (2-4 units), condos/co-ops and townhouses fell a respective 5%, 3.3% and 1.9%.
A real estate agent in San Jose, said about one-quarter of buyers he speaks to are investors. Roughly half are institutional investors and the other half are mom-and-pop investors, he said.
“San Jose has a lot of overseas investors buying sight-unseen, and a lot of home flippers who are purchasing dilapidated homes, putting some lipstick on them, and selling them for a profit,” Pellegrini said. “I’m also seeing parents buy second homes that they plan to rent out for a while and then pass on to their kids, some of whom just graduated college and can’t afford to buy themselves.”
LOL! Yeah, like for years we called ADUs “granny flats” — which are good in their original intent, but now the monsters being created are as far away as possible from what we imagined for our grandmothers just a few years ago. “Granny flat” makes them sound like they’re the grandparent of ” that cute little couple with 2.5 kids who bakes pies for all their new neighbors” as you say.
And we’ll be posting pics of some of the worse in San Diego for our contest — which ends at the end of business Friday, Aug. 23.
Don’t even get me started on “granny flat”. Also there is nothing “accessory” about building an apartment complex in your backyard. All these terms to cover up what they really are, just pisses me off.
Nice segway. Now we get to call ADU’s young adult flats? And parents helping their kids in this economic environment predatory investors? Not everybody is a Michael Mills.
Maybe next the Rag should have a contest for the best, new name for ADUs (granny flats out of date).
Hey, I appreciate you and G.Page going on Times of SD and defending Mat’s most recent piece, which we have reposted.
Just takin out the trash. A lot of just noise over there.
When I was formerly and easily able to look in DSD for Permits Applied For, I discovered the homeowners were really creative in describing what was to be built. Several descriptive adjectives; Granny flats, ADU’s, JADU’s, Artist Loft with kitchen, Companion Unit, Room addition with kitchen, Guest Unit, Garage Conversion, Children’s playroom, with kitchen, Air BnB’s, STR’s, SRO’s, are the ones I can remember. There’s no wonder the City of SD has no clue how many transient units, or leasable rental units SD has.