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Are Real Estate Investors slowing down?
April 25th, 2013 2:15 PM

With the market becoming more competitive, many think that investors are slowing down.  2011 was a banner year of investor activity and the market witnessed first-hand the effects of billions of dollars flow through their communities from hedge funds.

So since their activity is seemingly slowing the question remains; how long before they decide “cash in their chips?”

The National Association of Realtors, NAR, has been tracking investor activity very closely over the last 2 years especially.  They reported a drop in activity from 2011 to 2012.  Private funds were purchasing as much as 1.23 million investment properties and now, only 1.21 million. 

Owner occupied buildings actually increased from 2.79 million to 3.2 million.  That’s a 17% growth spurt.

Lawrence Yun, vice president of the NAR said, “Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals.  With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years.”

The dwindling activity is thought to be a result of the average cost for a single property increasing 15%, from $100,000 to $115,000 over the past two years. 

Two things remained very consistent both years; 1) 50% of all investors are cash buyers and 2) very little all investor inventory, less than 10% has been sold back on the traditional market.  Yun added;

“Property flipping modestly increased in 2012.  However, this isn’t flipping in the sense of what took place during the housing boom. Rather, investors generally are renovating and improving properties before placing them back on the market to resell at a profit.”


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Posted by Michael Hobbs on April 25th, 2013 2:15 PMPost a Comment

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