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
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.”