If private equity starts to purchase REO’s from banks that are empty. That bring more housing units in the market for renting. Therefore, is the beginning of the end for the rent spike?
By Hui-yong Yu and John Gittelsohn – Jul 3, 2012 7:36 AM PT
Blackstone Group LP (BX), the biggest buyer of U.S. commercial real estate since prices bottomed, is jumping into residential property as housing recovers.
The private-equity firm has spent more than $250 million this year buying foreclosed single-family houses with the intention of renting them out, said two people with knowledge of the effort. The goal is to acquire enough assets to potentially take public as a real estate investment trust, or sell to another company or even to tenants, said the people, who asked not to be identified because the plans are private.
Blackstone, which has loaded up on strip malls, warehouses and suburban office buildings in the past two years, is turning to residential real estate after a 34 percent plunge in prices since the 2006 peak. The New York-based company is the biggest investor seeking to enter the single-family leasing market as rents climb and the U.S. homeownership rate sits at a 15-year low, joining rivals including KKR & Co. (KKR) and Colony Capital LLC.
“It’s turning into a $10 billion industry,” said Colin Wiel, managing director and co-founder of Waypoint Homes, an Oakland, California-based company that has bought about 1,800 distressed homes for rent with backing from investors including GI Partners and Columbia University. “There’s a lot of competition.”
Blackstone’s real estate group has teamed with principals of Treehouse Group LLC of Tempe, Arizona, and Dallas-based Riverstone Residential Group to buy and fix up the homes, find tenants and maintain the rentals, said the people familiar with its strategy. Riverstone is an apartment-management company founded by brothers Nick and Peter Gould, owners of U.K. property-investment firm Regis Group Plc.
Traditionally, it’s been hard to turn a profit on single family residence, since they are closer to a consumer product then a investment product. This is something to keep an eye on.
La Habra Overview
| Median home price is $268,000. Based on a rental parity value of $437,000, this market is under valued. |
| Monthly payment affordability has been worsening over the last 2 month(s). Momentum suggests worsening affordability. |
| Resale prices on a $/SF basis increased from $207/SF to $207/SF. |
| Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months. |
| Median rental rates increased $75 last month from $1,739 to $1,814. |
| Rents have been slowly rising for 1 month(s). Price momentum suggests slowly rising rents over the next three months. |
| Market rating = 6 |
Proprietary OC Housing News home purchase analysis 
440 VALLEY HOME Ave La Habra, CA 90631
$395,000 …….. Asking Price
$395,000 ………. Purchase Price
6/24/2012 ………. Purchase Date
$0 ………. Gross Gain (Loss)
($31,600) ………… Commissions and Costs at 8%
============================================
($31,600) ………. Net Gain (Loss)
============================================
0.0% ………. Gross Percent Change
-8.0% ………. Net Percent Change
0.0% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$395,000 …….. Asking Price
$13,825 ………… 3.5% Down FHA Financing
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$381,175 …….. Mortgage
$101,197 ………. Income Requirement
$1,776 ………… Monthly Mortgage Payment
$342 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$99 ………… Homeowners Insurance at 0.3%
$397 ………… Private Mortgage Insurance
………… Homeowners Association Fees
============================================
$2,614 ………. Monthly Cash Outlays
($271) ………. Tax Savings
($569) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$119 ………….. Maintenance and Replacement Reserves
============================================
$1,910 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,450 ………… Furnishing and Move In at 1% + $1,500
$5,450 ………… Closing Costs at 1% + $1,500
$3,812 ………… Interest Points
$13,825 ………… Down Payment
============================================
$28,537 ………. Total Cash Costs
$29,200 ………. Emergency Cash Reserves
============================================
$57,737 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..
We're sorry, but it seems that we're having some problems loading MLS # P826459 from our database. Please check back soon.
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$449,000 16506 ELENA Ct |
0.24 miles 3 bd / 3 ba 2,285 Sq. Ft. |
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$435,000 1861 SAN JOSE Ave |
0.66 miles 3 bd / 1.5 ba 2,066 Sq. Ft. |
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$595,000 2331 CANFIELD Dr |
0.74 miles 4 bd / 3 ba 2,585 Sq. Ft. |
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$429,000 16372 PRUDENCIA Dr |
0.87 miles 3 bd / 2 ba 2,106 Sq. Ft. |
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$599,000 9818 CAPULET Ave |
0.98 miles 3 bd / 2 ba 2,124 Sq. Ft. |
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$505,000 1372 SOLEJAR Dr |
1.1 miles 3 bd / 2 ba 2,291 Sq. Ft. |
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$430,000 1731 SHEFFIELD Dr |
1.12 miles 4 bd / 2.25 ba 2,303 Sq. Ft. |
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$550,000 1215 SUNBIRD Ave |
1.18 miles 3 bd / 2.75 ba 2,395 Sq. Ft. |
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$445,899 1240 CASA DEL REY |
1.28 miles 3 bd / 2.25 ba 2,285 Sq. Ft. |
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$515,000 11842 SCOTT Ave |
1.51 miles 5 bd / 2 ba 2,105 Sq. Ft. |
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Reality of Foreclosures to Reverse Delusional Asking Price Increases
After falling flat in May, asking prices went up in June, and rent prices continued to see significant increases, according to reports from Trulia released Tuesday.
Asking prices on listed homes made a 0.3 percent month-over-month and year-over-year increase in June, according to Trulia’s price monitor. Quarter-over-quarter, asking prices rose by 0.8 percent. When excluding foreclosures, asking prices moved upwards by 0.8 percent from May to June and by 1.7 percent from June 2011. Asking prices are said to lead sales prices by about two to three months.
“We saw asking prices start to rise in February and predicted that other home price indexes would report sales price increases this summer for those homes – and they have,” said Jed Kolko, Trulia’s Chief Economist. “Since February, asking prices showed solid gains in four out of five months, including in June, so I expect to see the sales-price indexes show further increases in the months to come.”
On a seasonally adjusted basis, 44 out of the 100 largest metros saw yearly gains in asking prices, and 84 out of the 100 largest metros had quarterly increases for asking prices.
The metro with the biggest yearly gain in asking prices was Phoenix, where prices rose by 18.9 percent. Florida metros took the next three spots, with Miami coming in at second (+16.1 percent), Cape Coral (14.9 percent) third, and West Palm Beach (9.6 percent) fourth. Denver was fifth and had a 7.2 percent increase.
Despite these gains, Trulia warned that some of these top performing metros will start moving in the opposite direction.
“The huge price gains we’ve seen in Miami and Phoenix are not built to last. These increases will shrink or reverse as the backlogged foreclosures in these metros hit the market,” said Jed Kolko, Trulia’s Chief Economist. “In contrast, Denver, San Jose and Austin, which were spared the worst of the housing crisis, have strong price growth and strong job growth without a foreclosure overhang. Their recent price gains are less dramatic than Miami and Phoenix but are less at risk. Slow and steady wins the housing recovery.”
Prices for rent made a 5.4 percent jump in June compared to the year before, according to Trulia’s rent monitor. Out of 25 markets, 24 saw yearly increases in rental prices, with Las Vegas as the exception.
San Francisco posted a 14.7 percent yearly increase, making it number one for having the largest rent increase. Oakland came in at second with an 11.2 percent increase, followed by Denver (10.9 percent), Miami (10.5 percent), and Boston (10.3 percent).