Thursday, May 21 2009
One of the reasons home sales have risen this year is the spike in investor groups in troubled markets that are buying up clusters of foreclosed houses from banks.
In many cases, investors are prevailing over first-time home buyers and other owner-occupants because they bring cash to the table.
For instance, in Phoenix where 38 percent of April sales of single-family homes were all-cash deals, Mark Allen, a former division president at D.R. Horton, the nation’s largest home builder, is working with Gorilla Capital, which specializes in foreclosures, to buy dozens of properties at courthouse auctions.
Barclays Capital estimates that banks and loan investors owned 765,500 foreclosed homes as of April 1, up from 629,100 last year. By 2010, Barclays expects them to have acquired about 1.3 million homes. When the market improves, these owners will try to sell.
"All this investor buying isn't depleting supply, it's only shifting it around," Allen says.
Source: The Wall Street Journal, Michael Corkery (05/20/2009)