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Speculators are buying bottom tier San Diego homes at one of the fastest paces in the nation, according to Zillow.com. First-time homebuyers are being squeezed out as speculators buy low-price homes with the idea of renting them out to people who have been foreclosed upon, says Zillow. The speculators will pay with cash. Over the last year, the inventory of bottom-tier homes in the San Diego market has dropped 45.4%. The only metro areas in the largest 30 with higher percentages are San Francisco (53.2%), Phoenix (57.1%), Sacramento (55.4%) and San Jose (47.5%). Los Angeles is close at 45.1%. San Francisco, L.A., San Jose, and San Diego have extremely high home prices. But gamblers are snubbing depressed cities with very low prices: lower tier inventories are only down 12.7% in Detroit and 13.3% in Cleveland. Speculators are moving into depressed California metro areas: bottom tier inventories are down 59.7% in Fresno and 50.5% in Modesto, according to Zillow numbers.

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Comments

SurfPuppy619 Oct. 11, 2012 @ 8:49 a.m.

+They are taking a risk. There are still millions of homes underwater, the employment situation is still not stable, and things are not getting better despite being in a recession/depression for 5 years now................

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Don Bauder Oct. 11, 2012 @ 10:41 a.m.

SP: You are right: the gamblers are taking a risk. They are betting that housing prices recover. Prices are showing some signs of recovering, thanks in part to the extremely easy money policies of the Fed, but there are still a lot of foreclosures that haven't moved forward and the Fed's policies, which are destructive in the long term, can't go on forever. Best, Don Bauder

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tomjohnston Oct. 11, 2012 @ 10:44 a.m.

That's not gambling

A few months ago, an investor named Bill McMachen spent about $4.7 million to purchase all of the 627 foreclosed properties, all at once and for one price, in Macomb County in Michigan, which is near the Detroit area, if I remember the article correctly. That's a gambler. Then about 2 months ago, an LLC and spent $34 million, in cash, to buy 275 foreclosure houses across the Phoenix metro area. Whomever is in that LLC, they are whales.

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SurfPuppy619 Oct. 11, 2012 @ 1:34 p.m.

I think it is a major risk-may pay off, may not. There is the loss of income from that money when they buy real property and then are unable to get income, rents, for whatever reason. MI, especially metro Detroit, is so upside down, I would not make that bet. AZ is doing better, but I am very worried about the future of the country as we have lost our manufacturing backbone and most of the jobs being produced today-in the real world- are very low paying.

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Don Bauder Oct. 11, 2012 @ 11:19 a.m.

I remember reading a couple of years ago about speculators (gamblers?) in California buying rundown Cleveland homes in bad blighted neighborhoods for around $5,000 each -- sight unseen. I wonder whether the deals panned out. In Phoenix, which has a better future than Detroit or Cleveland, much depends on the quality of homes bought for that $34 million. There are a lot of very tacky homes in the Phoenix area. But $34 million could be a bargain for 275 homes. Best, Don Bauder

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Don Bauder Oct. 11, 2012 @ 3:10 p.m.

SurfPup: I understand that in Detroit, large, once-elegant homes sit vacant or are filled with squatters and druggies because the neighborhoods are so bad that the homes would never sell. In Florida, it's a different story. In some places such as Ft. Myers, new homes, never lived in, sit unsold because of the mold that accumulated when the air conditioners were turned off. Best, Don Bauder

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