Housing Speculators Leave L.A. For Hotter Markets

The L.A. Times reports:

Proportionately fewer homes in the Southland are bought by investors than in Phoenix, Las Vegas, coastal Florida and parts of Central and Northern California. In Los Angeles and Orange counties, investor activity peaked during the first half of 2004, when the absentee-ownership rate reached 14% of sales.

Speculators accounted for about 25% of U.S. home sales in 2005, according to the National Assn. of Realtors.

There are reasons investors have found the Southland less attractive. Speculators often prefer to buy and sell new homes, and relatively few new developments have been built here. And the median prices of homes in Los Angeles and Orange counties, now at $490,000 and $617,000, respectively, continue to rise at a steady rate year over year.

That has made the region's market both more costly and less prone to price surges — and quick profits — than Phoenix and Las Vegas.

If mortgage rates get above 7.25%,it will be interesting to see how much of a drop in speculation occurs in some markets.The higher rates go,the more costly it gets to be a speculator.In Southern California, few can now,afford to buy a home.