Investor Share Of Home Sales Reaches Lowest Level Since 2009

Posted by Patrick Barnard on August 04, 2016 No Comments
Categories : Residential Mortgage

Recent figures from the National Association of Realtors (NAR) show that the share of home sales to investors has subsided from a high of 18% in February to a low of 11% in June – the lowest share since July 2009.

But what is the cause for the drop? Is it a lack of inventory? Rising home prices?

According to Lawrence Yun, chief economist for NAR, it’s both – but rising home prices should probably get more of the blame. U.S. home prices have now risen year over year for 52 consecutive months, according to NAR’s data.

“Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy,” Yun says. “This will hopefully open the door for first-time buyers, who made some progress [in June] but are still buying homes at a subpar level, even as rents increase at rates not seen since before the downturn.”

A recent report from online real estate investment management firm HomeUnion shows that prices for investment properties purchased without leverage have increased at a greater rate than traditional housing.

The average price for a distressed home sold to an investor for all cash jumped 5.4% year over year to a median price of $160,000, HomeUnion’s research shows, while the owner-occupied median sales price grew only 3.3% to $253,600.

“As global economic upheaval weighed on investors decisions, single-family rental investment homes remained a safe haven for many investors,” explains Steve Hovland, director of research for HomeUnion. “Prior to the recent Brexit vote and ongoing uncertainty in the global equity markets, investors parked capital in real estate for its stable returns, which has resulted in higher investment home prices.”

“Owner-occupied home prices are hovering near all-time highs, which is keeping many potential buyers on the sidelines and slowing price growth,” adds Hovland.

The overall median sales price – including both owner-occupied and investment housing – increased 3.9% year over year to $234,500 in June.

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