The ripple effect...
At 2014’s year end, it’s as good a time as ever to look back
over the real estate investment
landscape to see if any new trends or directions may have become apparent. It
does look as if one development in the country as a whole may cause ripples
that could affect New Orleans real estate investment hunters in the coming year.
This is a development with roots that go back to the 2008
upending of the housing market. That triggered a glut of foreclosures, so that
banks, already up to their vaults in turmoil, found themselves holding uncomfortably
large numbers of repossessions. Bright-eyed executives at private equity firms
and hedge funds were quick to spot this as a new opportunity: they could scoop
up the repossessions for a song, rent them out, and then just wait to sell until
the economy improved.
By 2013 The New York Times was reporting that the Blackstone Group now owned some 26,000 rental homes—with
Colony Capital picking up more than 10,000 single-family residences. Warren
Buffet had endorsed the idea; J.P. Morgan and Morgan Stanley had set up new real
estate investment funds earmarked for the purchase of houses. Vague concerns about
absentee investor landlords were waved away—this was like some kind of newfangled
Institutional Investor Gold Rush, and as any ‘49er could have told you, in a
gold rush, there isn’t time to worry about the details!
The main real estate investment targets centered on certain
markets: Minneapolis, Atlanta, Detroit, Los Angeles, Las Vegas, New York, and
Phoenix saw the most activity. In some regions, 2012 and 2013 saw bidding wars
for repossessions and lower-priced housing, until by July of 2014, The Times could report that in some
areas “prices of the least expensive homes have more than doubled” in two
years. As Forbes reported in 2013, “Wall Street has been bullish on
real estate.”
Sellers (mostly banks) were happy. The institutional
investors were happy. However, ordinary people looking out for the same kind of
real estate investments found themselves competing with institutions. They were
largely beaten out or priced out of the market.
By the end of 2013, though, those earlier “details” that
had been ignored were beginning to rankle. Individuals whose real estate
investments were hands-on propositions may not have had the same kind of
problems, but a company like Colony American Capital had to report that it had
found renters for only 51% of its properties. Many private equity firms and
hedge funds began to report losses. As the CEO of Carrington Holding wrote, “We
just don’t see the returns there that are adequate to incentivize us to
continue to invest.” (Translation: Good-bye.)
With institutional investors bidding adieu to the areas
they’d previously targeted, any repercussions felt New Orleans’s real estate investment landscape
can only be to return to a more familiar market scenario—one where individual
investors have the last word. If 2015 will see you in the hunt for suitable
real estate investments in New Orleans, that should come as good news…as well
as a good reason to give me a call! 504-297-2619
Terez B. Harris
Terez Harris NOLA Realtor Group
Terez Harris NOLA Realtor Group
(504)297-2619
www.TerezHarris.com
TerezHarris@kw.com
Search the MLS!
(multiple listing service)
Search Terez's Active Listings!
TerezHarris@kw.com
Search the MLS!
(multiple listing service)
Search Terez's Active Listings!
Terez B. Harris Terez Harris NOLA Realtor Group 504-297-2619 www.TerezHarris.com
Keller Williams Realty New Orleans 8601 Leake Ave. New Orleans, LA 70118 504-862-0100
Keller Williams Realty New Orleans 8601 Leake Ave. New Orleans, LA 70118 504-862-0100
Each office independently owned and operated. All brokers and agents licensed in the state of Louisiana.
