Charlotte foreclosure rate falls
“It’s become harder, because the pricing has moved up,” said Gray, the global head of real estate for private equity firm Blackstone Group. “L.A. is probably the toughest market.”
As chief of one of the world’s largest real estate investment funds, with $60 billion in assets, Gray is the walking embodiment of the term “smart money.” To put it succinctly, he is “the man with the bank account,” which was how Mayor Antonio Villaraigosa introduced him Thursday at a chummy ceremony in downtown’s Arts District.
“Blackstone is a very, very important entity in this world, and they fund great real estate projects, hedge funds, private equity — they do a lot of stuff,” Villaraigosa went on to say. “One of the important things they are doing is investing in L.A. real estate.”
Gray was in town from New York to celebrate the construction of the final phase of a fancy condominium project Blackstone invested in. His company also has made headlines lately for becoming one of the biggest bulk buyers of foreclosed homes in the United States, including in Southern California. Blackstone — and a handful of other Wall Street firms — have been racing to snap up single-family homes to rent out for profit and long-term gains.
According to recent reports by The Times, Blackstone has poured close to $740 million into California real estate through January. But with the sharp recovery in home values, finding deals on properties these days is not easy, Gray said.
That’s a lament many hopeful, home-shopping families in the region can relate to. As The Times recently reported, real estate has gone from recovery to frenzy in recent months. Even buying a home in the hard-hit Inland Empire is tough.
Nevertheless, Blackstone has bought up enough homes in the Southland to get the kind of scale it was hoping for, Gray said. And its rental price per square foot remains about 34% less than the average rent in the region, he added, making the company’s product attractive. Nationwide, the company has had success in leasing out about 80% of its renovated homes, meaning demand is strong.
Although Blackstone rarely funds new projects, Gray said, it also saw an opportunity in the Barker Block condominium project downtown.
The condo project is across the street from the perpetually packed and trendy Urth Caffe on South Hewitt Street. It will boast a total of 310 units when complete. The latest phase, being celebrated Thursday, includes 68 units that will begin selling for about $400,000.
“We saw an opportunity to create value for our investors, and in doing so we are doing something good for the local community by helping to revive one of the city’s most historic neighborhoods,” Gray said during a speech at the construction party Thursday. “The Barker Block … will develop some of the first for-sale homes in downtown Los Angeles since the crisis, and it will be done in a style that will preserve the character of the Arts District.”
Gray was joined by Villaraigosa and Henry Cisneros, a former Clinton administration housing official who is now chairman of the project’s developer, CityView. Guests munched on fancy hors d’oeuvres and took tours of the under-construction and completed portions of the condominium project, which boasted sweeping views of downtown Los Angeles from its rooftop gym.
Overall, Gray thinks it’s good time to be in the real estate business. The housing market is improving. That’s not because firms like his are snapping up every cheap home in sight, he said, but because so few homes were built during the recession. And people still need a place to live.
“It’s simply supply and demand,” he said.
ALSO:
New players have big piece of housing pie
Home price expectations remained at a high in March, with almost half expecting an increase in the next year, according to data released Monday by government controlled mortgage buyer Fannie Mae.
The share of respondents who said home prices will increase in the next 12 months remained at 48% in March, matching February’s record high, according to Fannie
/quotes/zigman/226360 /quotes/nls/fnma FNMA . That share is up from 35% in March 2012. The data go back to June 2010, so after the housing bubble burst. The average 12-month home price change expectation fell slightly to 2.7%.
“Despite an uptick in concern expressed about the direction of the economy, it appears consumers believe that the housing recovery will march on,” said Doug Duncan, Fannie Mae’s chief economist, in a statement.
Another 37% of respondents said they expect prices to stay in the same in the coming year, while 10% expect prices to decline. Fannie’s poll included 1,004 Americans, and was conducted between March 2 and March 25.
Consumers’ upbeat views on housing prices follow months of positive news on the housing market. Year-over-year prices have been gaining since mid-2012, according to the S&P/Case-Shiller Home Price Index that follows 20 cities. Despite recent gains, home prices remain about one-third below bubble peaks.
However, when it comes to their personal finances and the economy, Americans remain concerned. According to Fannie Mae, the share of respondents who said the economy is on the right track fell three percentage points to 35% in March from 38% in February. Meanwhile, those expecting their personal-financial situation to worsen over the next 12 months rose four percentage points to 21% from 17%. These findings echo a recent report on consumer confidence that found gloomier expectations among respondents.
Why aren’t views on personal finances keeping pace with expectations for home prices? The answer may be found in wealth effects, which track increased spending from those who feel more confident given sustained asset-price gains.
“There is a growing understanding that households respond differently to wealth gains that are simply recovering from past losses, as opposed to gains that lift wealth to new highs. The former results in more muted wealth effects,” wrote Beata Caranci, deputy chief economist at TD Economics, in a Monday research note.
–Ruth Mantell
Read The Tell on Twitter @thetellblog
Read Ruth on Twitter @ruthmantell
The news is out. Real estate is back. Home buyers are in the game again, but they’re facing a huge inventory shortage in most markets. Some buyers make three of four offers on homes, only to keep losing out to other buyers.
In this tight market, buyers and real estate agents need to think outside the box. You may need to go after homes that aren’t listed for sale. Here are five ways to do that.
1. Look for ‘expired’ and ‘withdrawn’ listings
A good agent will scour the MLS for homes that were listed in the recent past but never sold. Many homes failed to sell because they were seen as overpriced at the time. Does their last list price seem like a valid price today? Chances are, the owner doesn’t realize how much the market has picked up and might still be open to selling the home. Have your agent contact the owner with a letter expressing your interest in purchasing the property. Show the owner you’re serious, and you’ll likely get a response.
2. Search for Make Me Move® prices
Do you feel like cattle being herded through a busy open house with dozens of other buyers? Scouring the Zillow app while on the Sunday open house circuit? You might want to filter listings by searching for homes with a Make Me Move price in the neighborhoods where you want to own.
Owners who have set a Make Me Move price have gone out of their way to indicate a price that would make them sell. Some would-be sellers are unrealistic in their pricing. But others may have listed their property months or years ago, and their price may in fact be doable. Reach out to them with an offer. It often works.
3. Check rental listings
Why would a buyer go after rental listings? Here’s why: The owner may have lived in the home at some point but had to move for a job transfer, divorce or life change. At that time, their home could have been underwater or the market simply wouldn’t support the asking price. Instead of listing it with an agent, they just decided to rent it and “ride it out” for a couple of years. Their current tenant might have given notice and, without knowledge of the changing market, the owner simply wants to rent it again. Go see the home. If you like it, find out if the owner would be open to selling. Make it easy, and they may be on board.
4. Don’t ignore overpriced listings
The No. 1 complaint among real estate agents everywhere is working with a seller who’s unrealistic about their home’s price, especially in this tight market. But as a buyer, you might use it to your advantage.
After six weeks or less in some markets, an overpriced home loses its luster. The seller doesn’t clean as often. Weeds grow in front. And it just may not show as well. The fading curb appeal, along with an unrealistic price, will keep buyers away.
How is this good for the buyer? Many sellers won’t list their home at a lower price but will sell it at a lower price. Go in with an offer before the first price reduction, if possible. Once they do drop the price, other buyers will take notice again, and you may have competition.
5. Off-market or pocket listings
Some homeowners want to sell but don’t want to or can’t list. Maybe they simply don’t want the hassle of keeping a clean home and dealing with showings. Or perhaps they’re just very private. Especially in the luxury market, some owners just don’t want to publicly list their homes.
In many markets, real estate agents regularly network with each other about potential deals. Some areas have dedicated websites for agents to share off-market properties, also known as “pocket” listings. Also, brokerage firms generally release upcoming listings to their agents a few weeks before they hit the MLS. Work with a well-connected agent and make sure you’re privy to these potential opportunities.
Think outside the box
Most active buyers spend months looking for a home the traditional way. Until prices rise enough to bring more sellers and inventory into the market, these buyers will likely keep facing tight housing inventory. That’s why it’s important to make sure your agent is trying every way possible to uncover opportunities for you. Be open to using non-traditional methods to beat the competition and take advantage of low interest rates and favorable pricing.
Related:
- How to Buy or Sell a Home That’s Off the Market
- 3 Tips for Avoiding House-Hunt Heartbreak
- Ways to Get Creative in a Real Estate Transaction
Brendon DeSimone is a Realtor & HGTV real estate expert. He has collaborated on multiple real estate books and his expert advice is regularly sought out by print, online and television media outlets like FOX News, CNBC and Forbes. An avid investor, Brendon owns real estate around the US and abroad and is licensed to sell in two states. You can find Brendon online or follow him on Facebook or Twitter.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.
