“Buy when there’s blood in the streets”

Sure, median home prices in California might be 60 percent of what they used to be last year. But that isn’t scaring investors away. In fact, it is doing quite the opposite.

It seems that the apparently weak and slowing housing crisis in California has attracted its fair share of investor interest.

Associations and advertisements might spread the cliché slogan “It’s a great time to buy. Prices are dropping and rates are historically low.” You’ve heard it. And I know I’ve said a few times myself. Well this time there is some statistical data that puts some meat behind this story.

According to a research project by RightNow Consulting, July 2008 showed 11.41% of residential purchases were made by investors, compared to the 6.74% from July 2007. That’s a 69% increase in investor activity compared to last years data. The study was conducted by analyzing the property data and including all the non-owner occupied purchase transactions in all California counties.  Homes that were not financed or were refinance transactions were removed from the property data.

California Gold Rush. Hardly. But one thing is for sure - investors see the potential of this weak market. Rentals are incredibly strong and home prices keep producing bargain discount homes. Financing these homes is certainly tougher, but sliding home prices makes it much easier for these investors to come up with the required 25-35% percent down payment.  Mortgage rates have been historically low; and with the recent bailout of Fannie and Freddie, rates will see even greater improvements. Bottom line, investors will continue to hang around as long as we are still bleeding.

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