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As investors shift, housing is the new stock market

Wed, 28 Aug 2013 00:07:29 +0000

Another large-scale investor, Aaron Edelheit, CEO of Atlanta-based The American Home, has a different take on the slowdown in investor demand.

“Last year, the amount of institutional investors activity exploded. What you’re seeing now is the natural digestion of that exponential growth. That means maybe a slowdown in how many home they acquire, it may mean letting go employees in areas where it doesn’t make sense.”

These investors are moving their focus from acquisition to profitability, hoping to show Wall Street that the business model is not only feasible but highly profitable. The American Home now boasts 2,500 homes in Atlanta; Nashville, Tenn.; Orlando and Tampa, Fla.; and Charlotte, N.C.

Edelheit said rental demand is tremendous, and management is working well, but the model is still too green for the larger investment community. “You look at the stock prices of the companies that are public, and it’s pretty clear that Wall Street remains unconvinced in the single family rental model, and I think it’s natural for these firms to start right sizing and make sure that they are profitable.”

That could mean consolidation, with some of the larger firms that have stronger management structures buying up smaller players. Large-scale investors are still a relatively small segment of the 14 million single family rental market, but it appears they are here to stay, despite the recent volatility. Smaller investors, however, may be moving on, having exhausted their cash and their credit opportunities.

(Read more: Home prices across the US defy gravity)

Last spring, Redfin was running seminars for small “armchair” investors on how to buy and manage single family rentals. The classrooms were packed.

“There was a surge because people read the papers—in March, April, there was a bull market in housing. Suddenly at every cocktail party somebody wanted to make a killing in real estate,” Kelman said. “Some wanted to ride the wave, but some just caught it late.”

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC

Article source: http://www.cnbc.com/id/100988740

Home values drop in SF, other big metro areas

Thu, 31 Mar 2011 01:41:28 +0000

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Real estate values in much of the Bay Area are continuing to fall, according to a report released Tuesday.

Home values in the San Francisco-Oakland-Fremont metro area — which includes San Francisco, Alameda, Contra Costa, Marin and San Mateo counties — dropped 1.9 percent in January from the month before and were down 1.7 percent year over year, according to the latest Standard Poor’s/Case-Shiller home price report.

San Francisco was one of 18 of 20 metro areas with year-over-year declines. The only areas with gains were San Diego, at 0.1 percent, and Washington, at 3.6 percent. Eight metro areas — Atlanta, Chicago, Detroit, Minneapolis, Phoenix, Portland, Ore., Seattle and Tampa, Fla. — had year-over-year drops of 6.7 percent or more.

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future,” David M. Blitzer, chairman of SP’s index committee, said in the report.

Pointing to a potential “double dip” for the nation’s real estate market, 11 cities — Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland, Ore., Seattle and Tampa, Fla. — reached new lows from the market’s peak in 2006 and 2007.

“The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” Blitzer noted. “At most, we have seen all statistics bounce along their troughs; at

worst, the feared double-dip recession may be materializing.”

Although San Jose is Northern California’s largest city, it’s not included in the Case-Shiller report because its metro area is not one of the nation’s 20 largest.

Earlier this month, however, DataQuick Information Systems reported that the median sale price for existing single-family homes in Santa Clara County was $495,000 in February, down 3 percent year over year.

The Case-Shiller indexes are designed to track the values of typical single-family homes in a region.

Contact Frank Russell at 408-920-5876. Follow him at Twitter.com/mercspike.

Article source: http://www.mercurynews.com/business-headlines/ci_17726918