The pace of housing sales has been rising in many markets this year, but it is only partly because families seeking affordable housing are returning to the market.I know Laurence, nephew of Nancy. He was one of my clients back in 2005 when I sold him an investment property in Richmond. The fact that he's in the market (after losing about 50% on that investment) and still purchasing is a good sign for the economy as a hole.
It also is because of investors like former Deutsche Bank managing director Matthew Cooleen, whose firm has spent $30 million buying pools of foreclosed houses from banks.
His newly formed Greenwich, Conn.-based firm, HudsonCross Financial, is betting it can make a profit reselling in beaten-down markets in states like Nevada, Arizona and Florida and in Southern California because it is paying so little for the homes.
Outside San Francisco, a former Morgan Stanley executive director's new firm is buying four houses for 75% less than they cost four years ago, and is raising $6 million to purchase others.
After mostly retreating from the housing market after the bubble burst, investors are returning in droves, hoping to take advantage of the distress. In many cases, Realtors say, investors also are outbidding first-time home buyers and other would-be occupants because they often come to the table with all-cash offerings.
"Foreclosures are low-hanging fruit at the moment," says Laurence Pelosi, who helped close big land and housing-development deals for Morgan Stanley before he left the bank earlier this year and joined McKinley Partners, a small investment firm that is buying foreclosures in California.
Foreclosures were the main reason for the large drop in real estate values these past few years. Evidence of investors purchasing these homes will lead to price stabilization, decreased supply (which is already at the lowest levels in years), and point to a "bottom" of the market.
SOURCE: WSJ
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