Bubble Watch: Investors are 51% of Southern California’s Homebuying Surge

Median price paid by local investors? $898,000

Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: Half of Southern California’s homebuying surge this summer can be tied to a big jump in the purchasing pace by investors.

Source: My trusty spreadsheet reviewed Redfin estimates of investor activity locally and in 40 major metropolitan areas in the third quarter, defined as purchases made by entities with corporate-sounding names or descriptions. 

The Trend

Surging home prices with gains of 30% in two years have clearly been a draw for investors to the four counties covered by the Southern California News Group.

nvestors bought 8,900 residences in the summer or 17.7% of all purchases. These weren’t fixer-uppers, by the way, as the typical sales price for these deals was $898,000.

Compare that with one year earlier, when homebuying was swiftly rebounding from a locked-down spring. Investors bought 6,758 homes in the summer of 2020, or 14.6% of the market. That’s a 32% jump in investor purchases.

Or look at ballooning bets this way: Local investors bought 2,142 more homes this summer vs. 2020’s third quarter — or 51% of the region’s 4,228 overall sales increase.

The Dissection

Let’s start by saying that if this Southern California speculator surge looks bold, it’s tame when viewed using a national yardstick.

Click here to read the full article at the Orange County Register