Real estate investors large and small have helped clear foreclosure inventories, supported prices in ailing markets and renovated sizable portions of the nation's housing stock. However, if their share of the housing stock or debt financing grows, they could pose significant risk to the nation's financial stability, a new study by two Federal Reserve economists concludes in what is believed be the first study exist on the effect of single-family-real-estate business investor activity on housing markets or other outcomes.
Only 200 of the 1.2 million homes that went into foreclosure this year were worth more than $5 million, but super luxury foreclosures are on the rise. When they can no longer pay their mortgages, though, it's the wealthy owners not their lender who take the biggest hit.
Institutional investor purchases in October were lower than a year ago and represented only 6.8 percent of all home sales in October, a sharp drop from a revised 12.1 percent in September and down from 9.7 percent in October 2012.
Blackstone began marketing the first-ever US home-rental asset-backed security on Wednesday, with some 300 potential investors expected in New York to peruse the nearly $480 million deal.
Though most observers forecast rising home prices would drive investors out of the market for single family rentals, that fact is that to date investors have purchased more homes than they did in all of 2012 or 2011.
Once a lowly line item on the nation's list of housing choices, single family rentals-once known as rental homes-- today are the hottest thing going.
Recovering prices helped short-term flippers earn an average gross profit of $54,927 on single family home flips in the third quarter, up 12 percent from a year ago.
One-third of consumers with a gross annual household income of $250,000 or more say they are considering the purchase of residential property in the next 12 months for personal use or as an investment
Institutional investors accounted for 10 percent of all sales in August, up from 9 percent in July and 9 percent in August 2012, reported RealtyTrac in its monthly foreclosure report released Thursday, September 26.
August showed a slowdown in traffic for all three groups of homebuyers - current homeowners, first-time homebuyers and investors but investors were the only group in the HousingPulse Homebuyer Traffic Indexes that scored below 50 in August, which indicates traffic dropped below what is considered a "flat" traffic level.
While declining numbers of foreclosures are slowing down most investors, the leading homes-for-cash company is expanding into new territories.
Two years ago, to the delight of investors and the anguish of homeowners, foreclosures regularly sold for 30 percent or more below the price of "normal" homes. How times have change! Now the foreclosure discount is less than half that amount and still headed south.
Real estate ranks second as America's favorite long term investment despite the three trillion dollars in equity homeowners lost during the housing depression, according to a new survey by Bankrate.com.
Small investors aren't the only ones pulling back from buying in a real estate economy where soaring prices are crimping their profits. Despite their bigger pockets, hedge funds are slowing down as well.
A sea change in the housing recovery is underway. Current homeowners are providing much of the buying power currently driving the housing market, while investors are continuing to lose steam in the face of rapidly escalating home prices.
Rising inventory levels during the final months of the buying season are dramatically boosting sales and prices have continued to increase as the forces driving the housing recovery shift from lack of supply to demand. Sales are soaring despite new evidence that investors are buying fewer properties.
In some markets--many of them in California--the home price rebound has pushed prices above their EHP level, which should be a caution sign for investors seeking to make money in a quick re-sale, according to the latest HomeVestor/Local Market Monitor Best Market Ratings for investors.
Real estate investors are responding to higher prices by buying fewer properties in the next 12 months and holding their rental properties at least five years or longer, according to a national survey of real estate investors conducted by ORC International for MemphisInvest.com and Premier Property Management Group.
Boasting of spending up to $8 billion dollars to buy tens of thousands of foreclosures to convert into single family rentals, nearly 50 Wall Street investment firms set real estate markets on fire over the past 18 months. Now they are running for cover as soaring prices water down their return on investment.
After accounting one out of four home sales in the depths of the housing recession and fueled turn-arounds in dozens of markets where waves of foreclosures and battered home values scared off other buyers, real estate investors today are playing a greatly diminished role in the housing recovery.
In another sign of institutional investors' appetites for foreclosures, inventories of presale foreclosures have declined nearly twenty percent since last year as lenders have made volumes of foreclosures available via REO tapes to well-funded hedge funds eager to buy in bulk.
Nearly 4 million more single-family homes have been added to the rental market since 2005. This new supply has fully caught up with the increased rental demand during the housing crisis - causing single-family home rents to flatten nationwide.
Have real estate investments peaked? After years of growth during the Foreclosure Eva, investment purchases declined slightly last year after surging 64.5 percent in 2011. With the cost and competition to buy distress sales growing and prices for normal homes rising, will investors pull back and start cashing in their assets?
The inventory of properties in the foreclosure process expanded by nearly 10 percent in the first quarter, casting a pall over the housing recovery as local markets prepare for more foreclosures than expected. However, a high level of demand driving by investor activity may mitigate their impact.
Last week the National Association of Hispanic Real Estate Professionals called on lawmakers in Congress and government officials to reverse investor-favored policies that have created an imbalance in housing inventory and unfavorable conditions for Hispanics and other first-time homebuyers.
Perhaps the greatest advantage of a short sale to beleaguered homeowner facing default and foreclosure is the opportunity to move on with life and put the bad debt behind them as quickly as possible. That advantage is shrinking as short sales take longer to sell than foreclosures.
While the rest of the nation's housing markets experience various levels of recovery, most markets in Florida seem to be relapsing to the heyday of the Foreclosure Era after a brief period of improvement.
Though hedge fund purchases on a national level have had minimal impact, in the nation's hottest foreclosure markets hedge funds, or institutional investors, are contributing to double digit foreclosure price increases and dramatic declines in REO inventories.
Last month the New Republic published a provocative article on hedge funds and real estate investing (<a href="http://www.newrepublic.com/article/112395/wall-street-hedge-funds-buy-rental-properties">Your New Landlord Works on Wall Street</a>) by former TV producer David Dayen. He said out loud what many people have been whispering.
Single family home tenants are 18 percent more likely than apartment tenants to stay in their current homes five years or longer, suggesting that demand for single family homes, the fastest growing rental category, will be more stable than multifamily demand, according to a new national opinion survey released today by Premier Property Management Group.
Demand for foreclosures is so great and supplies are so low in some of the nation's hottest foreclosure markets popular with investors that the price differences between REOs and full-price homes have virtually disappeared.
Iinventories of foreclosures accumulated during the processing slowdown in the wake of the Robogate scandal are slowing shrinking, absorbed by demand so healthy that distress sales are actually rising faster on a national basis than full-priced homes.
Despite rising prices and shrinking foreclosure inventories, 65 percent of active real estate investors plan to buy as many or more residential properties in the next 12 months as they did in the past year, according to a new joint BiggerPockets.com/Memphis Invest national survey conducted by ORC International for BiggerPockets.com, the nation's largest and most active real estate investing social network, and Memphis Invest, one of the nation's leading providers of single-family rental real estate investment services.
Rising prices, disappearing bargains and economic troubles at home are quickly thinning the ranks of foreign property buyers. Who, just a few months ago, were being hailed as a major force in Florida markets and other resort destinations.
Investor participation in the housing market dropped sharply in July, establishing a two-month trend and showing a clear reversal of long-term growth in investor purchases of residential properties, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
As interest grows in creating a marketplace to sell securitized blocks of single family rentals, similar to the securitization of mortgages, perhaps as early as this year, the authoritative ratings service Fitch Ratings today made it clear that the asset class poses some unique risks and that high investment grade ratings will be difficult to attain due to the lack of historical data and "ambitious growth strategies by regional operators".
On the same day the Census Bureau released the Q2 2012 Housing Vacancies and Homeownership report showing single family rental vacancies in the second quarter were lower than they have been since the first quarter of 2006, yet another well financed asset management company announced it will spend more than a billion buying, renting and selling distressed homes.
The explosion of single family rentals-houses bought by real estate investors and rented to a single tenant-is creating a new category of property management companies to serve them.
Widespread shortages in housing inventories, especially in states that have experienced large price declines since 2006, are reducing the time homes for sale are spending on market, especially move-in ready foreclosures (REO) .
While inventories of homes for sale have been shrinking this spring, MLSs are filling the void with rental listings for single family homes that until recently were foreclosures. Some 16.1 percent of all listings on MLSs today are rentals, more than double the number in 2006.
Lenders and investors no longer give short sales short shrift, according to the latest reports on the distressed sales market.
Investors bought 1.23 million homes last year, accounting for 27 percent of all existing homes bought in America, the greatest annual market share for investors ever recorded.
Only two out of ten of the nation's 8.7 million single family rental properties are managed by professionals; individual owner/ investors take care of most of the rest. Last year only about a third of single family rentals, 35 percent, made a profit on their rental income. Some 2.3 million lost money for their owners.
In the five years since the market peaked in 2006, homes in the bottom quarter of the market have lost more value proportionately than those in the top tier.
During the boom, the only way first-time buyers, minorities and working families could afford to buy a home was through subprime and creative financing. Now that homeownership is affordable, new barriers to financing and competition with investors are locking them out of homeownership and changing the residential fabric of our communities from ownership to rental.
Low home prices and strong demand for rental properties are causing a surge in investor buying, driving up the market share of homes purchased by investors.
With rents rising faster than last year, the picture for residential real estate investors is getting even better than it already was as a result of once-in-a-generation prices and low interest rates, according to the founder of the leading Internet platform for investors and real estate professional.
Even though the real estate depression has delayed many from moving ahead with plans to sell the family home, baby boomers are a red hot market for investment properties.
Anemic demand from owner-occupant homebuyers has forced investors to rent out about half of the homes they purchase -- as opposed to renovating and flipping the properties.
Bank-owned foreclosures (REOs) are taking significantly longer to sell than foreclosures bought and resold by investors, extending the timeline for REO foreclosures even longer than the extraordinary delays for resulting from slower processing.
Real estate investors are slightly more bearish than the general public about the outlook for prices in their local markets over the next six to 12 months.
Lower prices and the strong Canadian dollar are encouraging one in five Canadians to buy U.S. property today, according to a new survey of by the Bank of Montreal.
Investor activity dominated a sluggish distress sale market in February as homebuyers are increasingly frustrated by difficulties getting financing, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
All-cash home sales are setting records in market after market around the country as investors account for a growing share of home purchases and individual buyers, especially first-time buyers, fade as mortgage rates rise and home buyer demand softens further.
The quality, as well as the quantity, of many bank-owned properties in the REO inventory is creating a drag on home values because they are difficult to sell in today's market, Scott Sambucci, vice president of Altos Research, said yesterday in a Webinar for investors.
Prices on homes ready to be occupied fell an average of 6.8 percent between May and June, but prices for damaged foreclosed properties increased by 5.9 percent during the same period.
The number of American homes bought by foreign nationals has nearly doubled in the past year as falling property values and record numbers of distress sales encouraged immigrants and foreign investors to take advantage of affordable prices. With home purchases by US citizens plummeting in the wake of the tax credit, foreigners are now poised to gain an even larger ownership share of the US residential market.
Banks using real estate brokers and agents to value short sales are increasingly becoming the victims of fraudulent schemes that have occurred in more than 1 percent of short sales this year and have already cost lenders at least $50 million in lost revenue, according to CoreLogic.
Investors are back in the housing markets, driven by affordable prices, abundant foreclosures, low interest rates and now... rising rents.
Recent industry studies suggest factors are at work that will make bargains harder to find and profit margins slimmer.
The number of consumers interested in investing in real estate has doubled since March 2009.
Suddenly Fannie Mae and Freddie Mac are behaving like Wall Street Wonders instead of government-run utilities with massive debt and virtually no prospect of ever again operating like private entities.
S&P Equity Research recently lowered its fundamental outlook for the residential (apartment) REIT sector to negative from neutral based on the excess supply of vacant houses being rented out.
Commercial real estate is finally joining the party. Even though there has been no meaningful overbuilding in commercial real estate, the outlook for the industry has seriously dimmed. The retail and office sectors have turned down with vacancies rising. And the industrial sector is not far behind. A tightened credit market and a slumping economy are to blame.