Investor's Keep SOCAL Housing Market Strong

California home sales continued strong last month as investors snapped up mid- to high-end homes, though it was unclear whether the rebound will continue through the year, real estate research firm DataQuick reported Wednesday.

The region recorded its highest February sales in six years, with 15,945 homes sold in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties, DataQuick said.
That was down 0.7 percent from January but up 1 percent from February 2012.

The median sales price was $320,000, down slightly from January but up nearly 21 percent from February of last year, DataQuick reported.

Year-over-year prices - that is, prices compared with the same month in the previous year - have jumped by double digits each month since last August. Even so, the median sales price was only about what it was in mid-2003, DataQuick said.

And despite year-over-year improvement, sales remained nearly 10 percent below the February average.

Many of the January and February sales were to investors who went shopping for bargains during the 2012 winter holiday season, DataQuick President John Walsh said in a statement.
"That's when many traditional buyers and sellers drop out of the market, leaving a relatively high concentration of very motivated market participants, especially investors," Walsh said. "March and April will offer a better view of how broader market trends are shaping up this year."
Investor and cash buying was at or near all-time highs, DataQuick said.

Absentee buyers - mostly investors and some second-home purchasers - bought a record 31.4 percent of the Southern California homes sold in February.

More mid- to high-end homes - those going for between $300,000 and $800,000 - were sold in February compared with a year earlier, while lower-cost homes lagged, partly because a slowdown in foreclosures meant fewer homes for sale, DataQuick said.

There were some good signs.
"Foreclosure activity remains far below peak levels. Financing with multiple mortgages is very low and down payment sizes are stable," DataQuick said.

 

Imigration Helps Strengthen US Housing Sector

Increasing demand from new arrivals to the United States is helping to strengthen the housing sector, according to a new report from the Mortgage Bankers Association analyzing the effects of immigration on real estate market trends.

“Immigrants are an important and growing source of demand that has bolstered housing markets in recent decades,” Prof. Dowell Myers, of the University of Southern California’s Population Dynamics Research Group, said in a statement. “Growth in housing demand in recent decades has been more stable among foreign-born than native-born households.”

Homeownership among immigrant households has steadily increased, reaching 2.4 million by 2010, according to the report, and the number is projected to reach 2.8 million by 2020. In the gateway states of California and New York, immigrants account for most of the increase in homeownership rates. New arrivals represented more than 82 percent of the growth in homeownership in the Golden State over the last decade, and more than 65 percent of the increase in the Empire State. These real estate market trends were also pronounced in Illinois, New Jersey, Pennsylvania, Massachusetts, Ohio and Michigan.

Homeownerships rates rise with length of residency, according to the study. Slightly more than 15 percent of Hispanics who arrived in the U.S. in the 1980s were homeowners in 1990. The share rose to nearly 53 percent by 2010, and is expected to exceed 61 percent by 2020. The strong upward mobility of immigrants contributes to these real estate market trends.

A disproportionate share of the nation’s wealthiest citizens is made up of first- and second-generation Americans, according to a recent study from Spectrem’s Millionaire Corner. The most recent Census data shows that 12 percent of all Americans - roughly 36.7 people – were born in another county.
The share climbs to 18 percent among Americans with a net worth of $125 million or more.

These affluent investors are also more likely than the average America to have immigrant parents. More than one-fourth (28 percent) of $125 million plus investors are second-generation Americans. The share shrinks to 11 percent among the general population, according to our $25 Million Plus Investor 2012, which tracks a relatively high level of upward mobility among immigrant families.
“As the housing market continues its recovery, it is important to understand the demographic trends which are likely to impact housing demand in the years ahead,” Michael Fratantoni, executive director of the Mortgage Bankers Association’s Research Institute for Housing America.