Written by: John Tiner
As we predicted in our last newsletter, the sales market has made some big adjustments since fall. Large investors have pulled out of the purchase pool in a big way. Last July, 48% of all sales were cash buyers (cash buyers are almost always investment buyers such as Blackstone who purchased 1300 rental properties in Sacramento this past year). Blackstone is done buying in Sacramento now as are several other large investment buyers. Cash buyers represent less than 10% of all closings currently.
Investors are pulling back because the 30% run up in values have made their yields less attractive. Since early fall, inventories of available properties have gone from just 30-days to 90-days currently. Inventories of less than 90 days are considered to be a “Seller’s market” so we have now reached a market place of equilibrium.
Rent values have taken a little decline because of all the fully rehabbed investor properties that have flooded our market in the past year and a half. When their properties become vacant, long term rental owners are finding that they must reduce their rents or update their properties in order to maintain rent values.
The good news for those considering selling is that they appear to have ridden the market all the way to a peek – values are higher than they have been for many years. While Sellers are no longer receiving 10-30 offers the first week of a new listing, patient Sellers are enjoying prices that haven't been this good since 2008.
Posted on Fri, December 20, 2013