Investor Buying and the Housing Market Today

It’s no surprise that low home prices and a strong demand for rental properties are causing a surge in investor buying. This in turn has driving up the market share of homes purchased by investors.

According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, investor purchases hit 22.3 percent of closed transactions for the month of October, up from just 19.6 percent as of July. During the past three months, investor involvement has surpassed 20 percent, continuing a long-term trend of increased investor interest in the housing market.

According to a recent article by Susanne of RIS Media  “All-cash sales accounted for 29 percent of purchases in October, little changed from 30 percent in September and 29 percent in October 2010; investors make up the bulk of cash transactions”.

The National Association of REALTORS also stated recently that in its survey, “investors purchased 18 percent of homes in October, compared with 19 percent in September 2010”. Furthermore the article states that “First-time buyers accounted for 34 percent of transactions in October, up from 32 percent in September; they were 32 percent in October 2010”.

“Due to a combination of low home prices and growing demand for rental units, purchasing damaged Real Estate Owned, fixing up the properties, and then collecting monthly rents, can be an attractive financial play, the Campbell survey reported. In October, average prices for damaged real estate averaged $101,100, the lowest price recorded in two years. Home prices for non-distressed residential properties averaged $266,700 in October. Similar to recent months, there has been an increase in purchases for damaged real estate”, Stated Susanne.

According to susanne  “in some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” says NAR Chief Economist Lawrence Yun. “REALTORS® in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers. In addition, extending credit to responsible investors would help to absorb inventory at an even faster pace, which would go a long way toward restoring market balance.”

The demand for rental property remains robust. Campbell Surveys approximates that 61.6 percent of investor properties bought during the month of October will be rented out.

It’s interesting to watch the current conditions in the market change so rapidly; because so many investors are purchasing homes to rent until the market turns around, they seem to be the target market presently. This makes me wonder though how we could appeal to possibly new home buyers; I know that for my team we push every day to come up with new and innovative ways to appeal to a broader market.

What are some ways that have maybe worked for you to appeal to a greater client base in these uncertain economic times?