I’m seeing people buying REOs for 50% off peak, planning to be flippers in 2-5 years. Its hard to flip now because values are falling so fast. So, people are buying and renting. Problem is they are planning their investment strategy on today’s rents.

When I look at an REO I ask myself if I could cash flow if I needed to undercut the cheapest rental in the hood in order to attract a renter in a a down market. Even at today’s REO prices the numbers going forward don’t work.

In the IE they are still building new homes (lots, oddly) and there is a huge shadow inventory of empty homes that do not show up in the MLS. Rents are going to fall a lot. There are too many houses now, they are still building more and people are leaving CA in droves. Landlord is not a growth industry.

Wait until the coming tax increases take effect and start to hit home.