Housing.com News, Analysis & Opinion: Mortgage & Loan: The new "investor class"

It's too broad a brush stroke to say that the new class of buyers are all fueled by massive equity, driven by stratospheric prices. Many of these folks are, or will be, savvy investors who took a lucky break in the market. I wouldn't call flippers "gutsy," though. More like "risky" or "impulsive." Here's a money quote:

“The guy that’s going out making $80,000 a year and buying a million-dollar house because he can, and he’s living in the house — these are homeowners who are creating concern over a bubble,” Hooker said.

What this tells me is that the market is so far out of balance that was once considered a decent salary in ANY economy is now apparently not enough to get into the high-rollers' markets.

The problem also has to do with land shortages. Space gets bought out, prices rise, and buyers are priced so far out of the choice markets that they have to buy properties way off the beaten path. That means more money spent on transit, more time spent in the commute, and distance from the things that made living in a certain area attractive.

An article on the importance of location from the Washington Times points this up nicely. I particularly like this story for the way it drives home the notion that high-end luxury buyers are driving market prices just as much as free-wheeling lenders. It's not all "risky" buyers who got no-document loans with wack credit scores. Just mostly. :) The money quote:

"The time and length of someone's commute is of primary importance, so buyers are looking at a property's proximity to Metro," says Mr. Himali. "Within the city, parking is also very important. It's rare to find a condominium or even a home which includes a garage or parking space. Recently an outdoor parking space, not even in a garage, just the parking space, sold for $110,000 in the Dupont Circle neighborhood."

Six figures for a parking space. Don't tell ME the market isn't headed for a correction.

Business Week has a very interesting report on what areas might be hurt in a housing slump. I was told that Baltimore is hot right now for property and investing, so that's a good example of the knife edge the economy is dancing on. What happens when interest rates continue to rise, lenders get more skittish, and the market slows down? What'll sustain these local economies?

The big boomers (Cali, D.C., and NYC) aren't representative of the market as a whole. People will flock to these areas for jobs, opportunity, cachet--call it what you will. But outside those regions, the reverberations from a housing slide could mean serious pains for investors. Perhaps that's why the folks in the MSNBC article are buying homes in the cheap parts of the country. They've seen their future, and speculation isn't in it.

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MSNBC has a very telling look at the new breed of equity-based investors. It's too broad a brush stroke to say that the new class of buyers are all fueled by massive equity, driven by stratospheric prices. Many of these folks are, or will be, savvy investors who took a lucky break in the market. I wouldn't call flippers "gutsy," though. More like "risky" or "impulsive." Here's a money quote: “The guy that’s going out making $80,000 a year and buying a million-dollar house because he can, and he’s living in the house — these are homeowners who are creating concern over a bubble,” Hooker said. What this tells me is that the market is so far out of balance that was once considered a decent salary in ANY economy is now apparently not enough to get into the high-rollers' markets. The problem also has to do with land shortages. Space gets bought out, prices rise, and buyers are priced so far out of the choice markets that they have to buy properties way off the beaten path. That means more money spent on transit, more time spent in the commute, and distance from the things that made living in a certain area attractive. An article on the importance of location from the Washington Times points this up nicely. I particularly like this story for the way it drives home the notion that high-end luxury buyers are driving market prices just as much as free-wheeling lenders. It's not all "risky" buyers who got no-document loans with wack credit scores. Just mostly. :) The money quote: "The time and length of someone's commute is of primary importance, so buyers are looking at a property's proximity to Metro," says Mr. Himali. "Within the city, parking is also very important. It's rare to find a condominium or even a home which includes a garage or parking space. Recently an outdoor parking space, not even in a garage, just the parking space, sold for $110,000 in the Dupont Circle neighborhood." Six figures for a parking space. Don't tell ME the market isn't headed for a correction. Business Week has a very interesting report on what areas might be hurt in a housing slump. I was told that Baltimore is hot right now for property and investing, so that's a good example of the knife edge the economy is dancing on. What happens when interest rates continue to rise, lenders get more skittish, and the market slows down? What'll sustain these local economies? The big boomers (Cali, D.C., and NYC) aren't representative of the market as a whole. People will flock to these areas for jobs, opportunity, cachet--call it what you will. But outside those regions, the reverberations from a housing slide could mean serious pains for investors. Perhaps that's why the folks in the MSNBC article are buying homes in the cheap parts of the country. They've seen their future, and speculation isn't in it. Funny story of the day, courtesy of DCist: Arlington is a suburban conformist death trap. I'd say that's accurate. Ask Scooter Libby and Karl Rove if you don't believe me. ;)