hedge funds in real estate

Let’s unpack some fresh stats today to help interpret the market and see trends as they are unfolding before us. In the past month I’ve shared about hedge funds, cash and FHA, but let’s throw in conventional sales into the mix today. What is the quarterly percentage of FHA, cash and conventional sales in Sacramento County over the past few years? The chart below shows all sales under $200,000. Why have I been focusing on the market under 200K? This is why: 35% of all sales in Sacramento County this quarter have been cash, but 49% of all sales under $200,000 have been cash deals during the same time period. As you can see, cash has been devouring the market – particularly in Q4 so far. Conventional sales have seen a slight uptick from previous years. FHA deals have been suffering as cash has trumped the market.

By the way, last Sunday The Sacramento Bee wrote a solid piece on investment funds purchasing in Sacramento. I recommend reading it. You’ll see a quote from yours truly in the article too. 🙂

What else do you see? Does anything surprise you?

Chart of Cash FHA and Conventional Sales in Sacramento County - by Sacramento Appraisal Blog

Unemployment Rates & Hostess: Jobs are an important economic indicator. When interpreting real estate stats, I tend to go back to how many people are working in the Sacramento area. This impacts people’s ability to purchase as well as how much house they can afford too. Click on the thumbnail image on the side to see the trend of unemployment in Sacramento County over the past few years. Do you think we’ll see lower numbers next month in light of Hostess closing its doors in Sacramento? Feel free to use the image on your own blog or website (please use according to my sharing policy).

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

I mentioned last week how hedge funds have been a dominant force in the Sacramento market. THR California LLC (Blackstone) in particular bought nearly 3% of Sacramento County sales on MLS since August 2012. They are buying on MLS and on the court steps, and they’ve purchased 198 properties so far over these past few months.

Where is Blackstone buying? This is good to keep in mind if you or your clients are also competing for properties in these neighborhoods. Also, there will be more rentals in these areas in coming time, which will be an important trend to watch.

Blackstone Purchases in Sacramento County - by Sacramento Appraisal Blog

The map above shows all sales purchased by Blackstone in Sacramento County since August 2012.

The map above shows all sales in the Rosemont area as well as Rancho Cordova (there was only one sale in Anatolia). There is very little activity in the Arden-Arcade area and only three sales in Carmichael and one in Fair Oaks.

Elk Grove - Blackstone - by Sacramento Appraisal Blog

Mostly all purchases in Elk Grove were under $200,000, though some were closer to $250,000 and one slightly over $300,000.

Del Paso Heights - Blackstone - by Sacramento Appraisal Blog

Blackstone appears to be avoiding Del Paso Heights entirely, but they are definitely buying in older Natomas (there are very few sales in newer Natomas).

Oak Park and Tahoe Park - Blackstone Activity - Sacramento Appraisal Blog

Oak Park has also apparently not been a target for Blackstone so far. They are buying in Tahoe Park and throughout South Sacramento and Meadowview though.

Summary of Buying Philosophy (my opinion): Ultimately it seems the target property for Blackstone has been under $200,000 for the most part and in neighborhoods that generally have more stability. Many of the areas they are targeting are places very ripe for first-time buyers. The “move-up” more established areas like East Sacramento, Curtis Park and Land Park are being avoided completely. For further reference, THR California LLC (Blackstone) has 5 purchases in Yolo County, 7 in Placer County, 8 in San Joaquin County and 26 in Solano County (zero in El Dorado County).

UPDATE on 11/20/2012: Here is a Blackstone video shared on YouTube over the past week.