Bay Area Investors Like Sacramento, Vegas, Stockton & Tracy

Real estate investment by Bay Area residents has increased sharply, with the Sacramento, Las Vegas, Stocton & Tracy markets being the prime targets, according to the San Jose Mercury News. Statistics show that the purchase of out of area property by Bay Area residents is up 58% from last year at this time.

The wave of investment was led by purchases in communities stocked with rental housing, with Sacramento, Las Vegas, Stockton and Tracy among the top destinations for Bay Area residents’ out-of-area real estate spending, according to information compiled for the Mercury News by MDA DataQuick.

That’s quite a shift from five years ago, when many buyers were flocking to well-appointed condos and homes in tony vacation enclaves. The data looked at home sales in which the property address and the buyer’s mailing address were in different places.

“People are looking for value in areas where prices have fallen,” said Matthew Anderson, a partner with economic research firm Foresight Analytics in Oakland. “It seems pretty clear that the increase in volume was in the areas that have been hardest hit by price declines and high volumes of defaults.”

Many of the buyers are purchasing for cash, with a long term time horizon. Due to falling values, many properties in these distant markets can have positive cash flow even if you finance much of the purchase with a mortgage. Thanks to rock bottom prices and low rates, many of these markets are starting to rebound. Let’s hope it continues.