Torcana.com Sales & US Sourcing Manager David Shaw has his finger on the Florida disclosure market like few others.
He joins us today to discuss his experiences with distressed US properties over the past year. You’ll find a transcript of this interview below (also available on www.torcana.com/podcasts), where David discusses the main concerns of investors today and gives his opinion on where the best investment opportunities will be.
Q) Hi David. What do you feel are the biggest challenges in your day to day position as Sales and Sourcing Manager for Torcana?
Thanks Colin. My main challenge is communicating the furious pace of the distressed USA property market to clients. With property activity moving at a snail’s pace in Ireland and the UK, there is an understandable but hugely misleading feeling on this side of the pond that there is plenty of time to invest in distressed assets and that it is a “buyers market”. As the monthly statistics have been showing, the reality is completely different.
Q) What changes account for this fast pace?
Well, for starters, the blind fear and panic of late 2008 and early 2009 are now distant memories.
Firstly, regular investors are back and like all smart investors, they are ruthlessly snapping up the best properties in the best locations at the best prices.
Secondly, regular Americans with good credit rating have been availing of large housing grants (up to $8000) and high LTV mortgages (up to 97%) to purchase their own homes at 10 year lows. This is having a profound effect on the market.
Thirdly, capital has been flowing back to private equity investors, pension funds and hedge funds. These are the silent whales of the market and they are literally hovering up thousands of foreclosure properties before they even register on a normal investor’s radar.
Total housing inventory is 40% down on last year and real bargains on high end foreclosure properties are like hens teeth. I have seen seasoned operators bidding cash on 5 or 6 deals before getting one of them accepted.
Q) What is your reading of the US housing market?
The bad news is that opportunities for easily purchasing a property at the very bottom of the US market are gone. This isn’t necessarily making front page news in The Times but statisticians and reporters tend to print yesterdays news.
There are two fundamental market forces at play. There is the “real market” which comprises 90% of existing US residential property. This stock may have lost significant value in the last few years but it is neither distressed nor foreclosed and the vast majority of it is not for sale.
The other, temporary market is the “distressed market” which completely undermines all efforts of the real market to sell surplus stock. This is because the “distressed market” as you will guess, is comprised of foreclosed and distressed property from banks and developers.
This market is the only show in town as far as bargain hunters are concerned, and it is our knowledge of the main players in this market and the process by which we help clients purchase, tenant, maintain and resell these assets that makes Torcana stand out from the crowd.
Contact Info:
Colin Murphy
29 Ballsbridge Rd, Dublin 4, Ireland
Dublin, Ireland, 28003
Telephone +353 1 4434 466
Fax: +353 1 258 6016
Website: http://www.torcana.com
Email: investments@torcana.com
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