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Florida continues to shoulder the burden of extremely high inventories. Until this inventory has been absorbed, we feel that investors must be extremely wary of investing in most markets in Florida.
Detroit still has the lowest investor grade prices ($20,000) in the nation. (We define “investor grade” as the 15th percentile price point in the For Sale listings market). Not coincidentally, it has one of the highest unemployment rates of any major metropolitan area in the U.S. Inventories are dropping, which may be due to absorption from investors and owners not putting homes on the market while they wait for the market to stabilize. The good news for Detroit and other Midwestern cities could be President Obama’s focus on reenergizing industry and employment in those areas. At the low, low prices of housing in some of these markets, investors might consider taking positions to participate in a potential upswing.
California markets continue their freefall with no end in sight. With few exceptions, we don’t feel good about California for buy-and-hold investors, as we expect prices and demand to be uncertain for some time.
And, finally, California distressed property inventories (foreclosures, bankruptcies, FSBO, and other) are still at very high rates on a per-capita basis as well as a percentage of total inventories.
