If a home is purchased only as an investment and not as a place to live, a comparison of average annual returns clearly shows that though most homeowners make a positive return, investing in equities offers favorable returns more often than investing in housing. That’s the bottom line from Ellyn Terry and Jessica Dill, two economists at the Atlanta Federal Reserve, in a working paper published June 12.

The two researchers set out to answer the questions: With average returns so close to zero, just how often has the housing market produced losers? And how does investing in housing compare to investing in equities? They did not look at the “buy and hold” strategies popular among investors seeking cash flow from rents, but only at appreciation.

They computed the average annual return of home prices across all possible combinations of start and stop points using the Shiller house price series from 1926 to 2012. The distribution depicts returns concentrated around zero with some skewness to the right. Eighty percent of all start-stop point observations experience some degree of positive return.

To take into account the duration of ownership, they assumed that the average homeowner lives in his or her home for 13.3 years, based on analysis by Paul Emrath at the National Association of Home Builders. They found the average annual returns for an asset held for a period of 13 or more years is substantially less volatile than for an asset held for fewer than 13 years, and those investing for the longer term were much more likely to have positive returns.

“We compute that 40 percent of homes owned for less than 13 years have negative average annual returns, compared to 12 percent of homes owned for 13 years or more. Interestingly, while a much greater portion of those owning for 13 or more years obtain positive returns, the average annual return was actually slightly higher for those owning fewer than 13 years (0.95 percent versus 1.03 percent),” they found.

They applied weights for average length of ownership. Using the weights, we recomputed average annual returns across all possible combinations of start and stop points for average length of ownership. The distribution continues to show that returns are concentrated around zero with skewness to the right; two-thirds of all investors in this distribution experience some degree of positive return.

They ran through this same exercise with the S&P 500 Index (which we used as a proxy for the stock market) to provide an apples-to-apples comparison of the average annual returns that one could expect from an alternative investment in stocks. The results depict a wider distribution, with longer, fatter tails and some skewness to the right. In other words, there is more volatility in terms of return, but with that volatility comes an opportunity for larger gains over time. In fact, the weighted average annual return of the S&P 500 is 4.55 percent, compared to 0.97 percent for the Shiller real home price index.

“It’s important to note that the distributions of returns for housing in all these computations are not the distribution of returns for every possible house purchase. Likewise, the returns shown for the S&P 500 are not the entire universe of returns from buying and selling individual stocks. Instead, these returns are based on a pool of housing and a pool of stocks,” they wrote.

“Further, the returns to housing in the chart ignore the fact that homeowners might have additional gains from owning if their mortgage replaces rent. Indeed, according to some calculations, homeowners who buy a home today and hold it for seven years can expect to pay 44 percent less than people who choose to rent,” the concluded.

Inventories have risen by about 25 percent since the beginning of the year, signaling a potential end to a sellers’ market and a greater balance between market supply and demand. The monthly increases in the for-sale inventory that took place in the past two months are among the highest observed since Realtor.com has been collecting these data.

In May the inventory deficit fell to 10.11 percent on a year-over-year basis. Realtor.com’s inventory (1,852,740) was larger in May than it has been in ten months.

“We are seeing large regional markets across the country leading the way to national recovery. These regions are acting as a microcosm for what’s slowly happening in the larger real estate market,” said Steve Berkowitz, chief executive officer of Move. “Overall, we’re seeing seller confidence beginning to respond to consumer demand. Nationally, there are more homes going on the market for a shorter amount of time. And this is happening in our hot markets on a much larger scale.”

The nationwide median list price rose to $199,000 in May, the highest level since mid-2009. On a year-over-year basis, the median list price was up by almost 5 percent. At the same time, the average age of the for-sale inventory dropped on both a monthly and year-over-year basis, reflecting a surge of new property listings.

The median age of the inventory fell to 79 days in May, down by 2.47 percent over the month and by 13.19 percent on a year-over-year basis. It’s the youngest median age of inventory ever reported by Realtor.com.

Super-heated markets are in the process of cooling down as a surge in recent listings is a greater balance between supply and demand. For example, the month-over-month median list price increase in the top 10 markets in the nation, which includes 7 California markets, dropped from an average of 7 percent in April to just 3 percent in May, while the size of their for-sale inventories rose by an average of 13 percent.

On a year-over-year basis, median list prices in May were up by 1 percent or more in 103 of the 146 MSAs covered by Realtor.com, and were up by 5 percent or more in 71 MSAs. Only 3 markets experienced a decline of more than 5 percent. These results represent a steady improvement since the beginning of the year, with an increasing number of markets registering increasingly larger list price gains.

The UFA Default Risk Index for the second quarter of 2013 rose to 106 from last quarter’s revised 97 in our baseline scenario. Under current economic conditions, investors and lenders should expect defaults on loans currently being originated to be 6 percent higher than the average of similar loans originated in the 1990s, due solely to the local and national economic environment. That’s a key finding of the latest UFA Mortgage Report by University Financial Associates of Ann Arbor, Michigan.

“These readings on the Index are the lowest in almost 10 years, but we may not be able to declare the mortgage crisis over yet,” said Dennis Capozza, who is the Dale Dykema Professor of Business Administration in the Ross School of Business at the University of Michigan, and a founding principal of UFA.

“Although the default risks on newly originated mortgages are similar to the average of the 1990s, the current situation is not ‘typical’ or ‘normal’. In today’s market the negative effect of high unemployment rates is being offset by very low mortgage rates and accommodative monetary policy. In most recoveries there is usually a short transitional period similar to the current situation; but it is not ‘common’ or ‘typical’,” Capozza said.

The UFA Default Risk Index measures the risk of default on newly originated prime and nonprime mortgages. UFA’s analysis is based on a “constant-quality” loan, that is, a loan with the same borrower, loan and collateral characteristics. The Index reflects only the changes in current and expected future economic conditions, which are much less favorable currently than in prior years.

The monthly increase in overall foreclosure activity was caused largely by an 11 percent month-over-month increase in bank repossessions (REOs), although REO activity was still down 29 percent from a year ago.

REO activity increased from the previous month in 33 states — including North Carolina (up 60 percent), Oregon (up 57 percent), Wisconsin (up 44 percent), Illinois (up 44 percent), Colorado (up 23 percent), and Michigan (up 19 percent). REO activity increased 9 percent from the previous month in non-judicial states and was up 13 percent from the previous month in judicial states.

Among the five lenders involved in last year’s national mortgage settlement, all but one (Citi) posted monthly increases in REO activity, indicating that temporary stoppages of foreclosure sales announced during the month by some of the lenders involved in the settlement had little lasting impact on the number of completed foreclosures for the month.

U.S. foreclosure starts increased 4 percent from the previous month but were still down 33 percent from a year ago. Foreclosure starts increased from the previous month in 26 states and were up from a year ago in 14 states, including Maryland (up 229 percent), Connecticut (up 122 percent), Hawaii (up 108 percent), Arkansas (up 84 percent), New Jersey (up 82 percent), Nevada (up 81 percent), Washington (up 53 percent), Pennsylvania (up 26 percent) and New York (up 13 percent).

The foreclosure problem continued to shift away from non-judicial states and toward judicial states. Judicial states accounted for five of the top six foreclosure rates nationwide: Florida, Ohio, Maryland, South Carolina and Illinois. At No. 2, Nevada’s foreclosure rate was the highest ranked among non-judicial states.

Among the nation’s 20 largest metros, those with the biggest increases in median home prices tended to be in states where a non-judicial foreclosure process has allowed foreclosures to be absorbed by the market more quickly. Seven of the 10 metros with the biggest jumps in median home prices from a year ago were in non-judicial states, while all five metros with flat or declining median prices were in states with a judicial foreclosure process.

“Foreclosure activity continued to bounce back in some markets where it may have appeared the foreclosure problem had been knocked out by an aggressive combination of foreclosure prevention efforts over the past two years,” said Daren Blomquist, vice president at RealtyTrac. “Places like Nevada, where foreclosure starts increased to a 20-month high, and Maryland, where overall foreclosure activity increased to a 33-month high. Still, the emerging housing recovery has strengthened most local markets enough to quickly shake off a few more blows from these nagging foreclosures.”

RealtyTrac’s U.S. Foreclosure Market Report for May 2013 shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 148,054 U.S. properties in May, an increase of 2 percent from the 75-month low in April but still down 28 percent from May 2012. The report also shows one in every 885 U.S. housing units with a foreclosure filing during the month.

A 20 percent monthly increase in foreclosure activity pushed Florida’s foreclosure rate to highest among the states in May, up from the No. 2 ranking in April. One in every 302 Florida housing units had a foreclosure filing during the month, nearly three times the national average. Florida foreclosure starts jumped 39 percent from a two-year low in April, but were still down 17 percent from a year ago. Scheduled foreclosure auctions in Florida increased 6 percent from the previous month and were up 79 percent from a year ago, while Florida bank repossessions increased 14 percent from the previous month and were up 20 percent from a year ago.

Nevada foreclosure activity increased annually in May after 27 consecutive months of annual decreases, but the state’s foreclosure rate still slipped to second highest among the states after ranking No. 1 in April. One in every 305 Nevada housing units had a foreclosure filing during the month. The increase in overall foreclosure activity in Nevada was driven primarily by an 81 percent year-over-year increase in foreclosure starts, which reached a 20-month high in May. Meanwhile scheduled foreclosure auctions in Nevada increased 21 percent from the previous month but were still down 14 percent from a year ago, and bank repossessions increased 4 percent from the previous month but were still down 64 percent from a year ago.

Ohio posted the nation’s third highest state foreclosure rate for the second month in a row in May, with one in every 584 housing units with a foreclosure filing during the month. A total of 8,770 Ohio properties had a foreclosure filing during the month, down 27 percent from a 31-month high in April and down 15 percent from May 2012. Ohio foreclosure starts and scheduled foreclosure auctions both decreased in May, but bank repossessions were still up 7 percent from a year ago — the ninth consecutive month with an annual increase in bank repossessions.

Maryland foreclosure activity increased 11 percent from the previous month and was up 134 percent from a year ago, and the state posted the nation’s fourth highest foreclosure rate in May: one in every 587 housing units with a foreclosure filing.

South Carolina foreclosure activity decreased 2 percent from the previous month and was down 11 percent from a year ago, but the state still posted the nation’s fifth highest state foreclosure rate in May: one in every 600 housing units with a foreclosure filing.

Other states with foreclosure rates ranking among the 10 highest nationwide were Illinois (one in every 606 housing units with a foreclosure filing), Georgia (one in 693 housing units), Washington (one in 736 housing units), Arizona (one in 742 housing units), and Wisconsin (one in 774 housing units).

With one in every 209 housing units with a foreclosure filing, Miami posted the nation’s highest foreclosure rate in May among metropolitan statistical areas with a population of 200,000 or more. Foreclosure activity in the Miami metro area increased 29 percent from the previous month and was up 59 percent from a year ago.

Five other Florida metro areas posted foreclosure rates that ranked among the top 10 in May: Jacksonville at No. 2 (one in every 225 housing units with a foreclosure filing); Tampa at No. 3 (one in every 290 housing units); Orlando at No. 7 (one in every 336 housing units); Ocala at No. 9 (one in every 352 housing units); and Sarasota at No. 10 (one in every 360 housing units).

Other metro areas with foreclosure rates ranking in the top 10 were Las Vegas at No. 4 (one in every 296 housing units); Reno, Nev., at No. 5 (one in every 301 housing units); Reading, Pa., at No. 6 (one in every 306 housing units); and Rockford, Ill., at No. 8 (one in every 347 housing units).

Among 20 of the nation’s largest metros, those with the biggest increases in median home prices tended to be in states where a non-judicial foreclosure process has allowed foreclosures to be absorbed by the market more quickly. Seven of the 10 metros with the biggest jumps in median home prices from a year ago were in non-judicial states, and foreclosure activity in all seven of these metros was down by 25 percent (Denver) to 64 percent (Phoenix) from a year ago.

Meanwhile all five metros with flat or declining median prices were in states with a judicial foreclosure process, and in all but one of these metros (Boston) foreclosure activity increased in May from a year ago.

The analysis counters the conventional belief that supplies of lower tier homes have declined more than higher priced homes due to the effects of negative equity, which is more prevalent among mid and lower income homeowners, and declining numbers of distress sales, which are generally lower priced homes.

Other sources show that it is taking two or three times longer to sell higher priced homes than the average priced home. The Institute for Luxury Home Marketing reported Tuesday that the average days on market for homes priced over $500,000 was 161 in the first week of June. The National Association of Realtors reported the median time on market for all homes was 46 days in April, down sharply from 62 days in March, and is 45 percent faster than the 83 days on market in April 2012. The median age of inventory for all homes on Realtor.com was 79 days in May.

Walt Danley, a leading luxury Realtor in Arizona, recently criticized Zillow’s system of relying on its automated valuation model algorithm (or “Zestimate”) to identify luxury homes used in its data. He claims the algorithm is underpricing homes, excluding many from the luxury category.

“There isn’t an accurate way to apply algorithms relying on big data to small data sets. Because there aren’t as many homes per square mile in luxury neighborhoods, there simply can’t be the same number of home sales to use as data points. A real estate agent who knows the area and understands the nuances of the inventory is crucial to arriving at a fair price when you can’t draw on dozens of recent, similar sales.

“Keep in mind that inaccuracy can go both ways, and while it was common for the Zestimate to overprice homes during the recession, they are now underpricing homes using the low price data from 2012. Pricing hasn’t been setting new records in luxury homes despite some upward pressure. Bargain hunters pointing to a Zestimate to justify a low-ball offer will generate more laughs and eye-rolls than it will signed contracts,” wrote Danley on his website June 4.

Zillow’s inventory report found that overall, year-over-year inventory levels improved in June compared to January in 70 metros and the nation as a whole. Among the 30 largest metro areas covered by Zillow, those with the highest degree of year-over-year inventory improvement between January and June include Phoenix (31.9 percentage point improvement); San Diego (14.9 percentage point improvement); and Minneapolis (13.5 percentage point improvement).

Inventory shortages worsened between January and June in 29 metro areas overall, and in 11 of the top 30 largest metros. Large metros where inventory constraints have tightened the most since the beginning of the year include Las Vegas (-21.8 percentage point worsening); Chicago (-12.3 percentage point worsening); and Washington, D.C. (-9.8 percentage point worsening).

“As the recovery has progressed, inventory constraints have played a major role in rapidly pushing up home values in many areas, as increasing demand for homes ran headlong into limited supply. It has always been just a matter of time before more supply came on the market to meet this demand, as homebuilders built more new homes and sellers entered the market to capitalize on recent robust appreciation in their own homes,” said Zillow Chief Economist Dr. Stan Humphries. “Inventory will likely remain below year-ago levels for a while yet, as builders ramp up capacity and sellers wait to squeeze every drop of equity from their home before listing. But a corner has been turned. Going forward, as this new supply makes its way to market, we expect the pace of home value appreciation to slow down from unsustainably high annual levels of 5 percent or above to more moderate levels closer to historic norms of 3 percent or 4 percent.”

Some 850,000 more homeowners with mortgages are no longer under water, bringing the total number of mortgaged residential properties with equity to 39 million. However, 9.7 million, or 19.8 percent of all residential properties with a mortgage, were still in negative equity at the end of the first quarter of 2013 with a total value of $580 billion. This figure is down from 10.5 million*, or 21.7 percent of all residential properties with a mortgage, at the end of the fourth quarter of 2012, according to CoreLogic.

The national aggregate value of negative equity decreased more than $50 billion to $580 billion at the end of the first quarter from $631 billion at the end of the fourth quarter of 2012. This decrease was driven in large part by an improvement in home prices.

Of the 39 million residential properties with positive equity, 11.2 million have less than 20 percent equity. Borrowers with less than 20 percent equity, referred to as “under-equitied,” may have a more difficult time obtaining new financing for their homes due to underwriting constraints. At the end of the first quarter of 2013, 2.1 million residential properties had less than 5 percent equity, referred to as near-negative equity. Properties that are near negative equity are at risk should home prices fall. Under-equitied mortgages accounted for 23 percent of all residential properties with a mortgage nationwide in the first quarter of 2013. The average amount of equity for all properties with a mortgage is 32.8 percent.

“The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity,” said Dr. Mark Fleming, chief economist for CoreLogic. “During the past year, 1.7 million borrowers have regained positive equity. We expect the pent-up supply that falling negative equity releases will moderate price gains in many of the fast-appreciating markets this spring.”

“The negative equity burden continues to recede across the country thanks largely to rising home prices,” said Anand Nallathambi, president and CEO of CoreLogic. “We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap.”

Highlights as of Q1 2013:

• Nevada had the highest percentage of mortgaged properties in negative equity at 45.4 percent, followed by Florida (38.1 percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5 percent). These top five states combined account for 32.8 percent of negative equity in the U.S.
• Of the largest 25 metropolitan areas, Tampa-St. Petersburg-Clearwater, Fla. had the highest percentage of mortgaged properties in negative equity at 44.1 percent, followed by Miami-Miami Beach-Kendall, Fla. (40.7 percent), Atlanta-Sandy Springs-Marietta, Ga. (34.5 percent), Chicago-Joliet-Naperville, Ill. (34.2 percent) and Warren-Troy-Farmington Hills, Mich. (33.6 percent).

The market’s easing is likely a result of the substantial monthly increase in inventory seen in April, the Seattle-based brokerage reported in its May 2013 Bidding War Report, which is based on statistics compiled from 2,000 offers written by Redfin agents in May. The number of homes for sale grew 6.4 percent from March 2013, the largest monthly gain since March 2010. Interest rates, which rose slightly in May, could also play a role in the declining demand seen last month.

Despite easing competition, seven out of 10 Redfin offers still faced multiple bids last month, causing homebuyers and their agents to use creative strategies.

Four of the top five most competitive markets were all in California: San Francisco (87.9% of Redfin offers faced bidding wars), Los Angeles (86.1%), Orange County (83.9%) and San Diego (72.6%). Boston rounded out the top five with 68.1% of Redfin offers facing competition.

San Diego and Orange County posting the largest month-over-month declines in May, seeing 16.4 and 10.3 percent drops in the percentages of Redfin offers facing bidding wars. Nearly half (49.0%) of Redfin’s winning offers were higher than the asking price, a slight drop from 51.9% last month.

Pre-inspections (a competitive strategy in which the buyer has the home inspected before submitting an offer so that they can safely waive the inspection contingency) are distinctly regional, included in 18.2% of Seattle offers, 3.3% of Washington DC offers, and 2.7% of Baltimore offers. Pre-inspections were not part of the winning offers in any other city.

The table below ranks the hottest real estate markets in order of competitiveness.

Multi-bid offers have declined from 73.3 percent of offers written in April to 69.5 percent of offers written in May by Redfin agents, basically the same as May 2012, when 69.3 percent of Redfin offers went into bidding war. Most Redfin agents are located in West Coast markets.

The market’s easing is likely a result of the substantial monthly increase in inventory seen in April, the Seattle-based brokerage reported in its May 2013 Bidding War Report, which is based on statistics compiled from 2,000 offers written by Redfin agents in May. The number of homes for sale grew 6.4 percent from March 2013, the largest monthly gain since March 2010. Interest rates, which rose slightly in May, could also play a role in the declining demand seen last month.

Despite easing competition, seven out of 10 Redfin offers still faced multiple bids last month, causing homebuyers and their agents to use creative strategies.

Four of the top five most competitive markets were all in California: San Francisco (87.9% of Redfin offers faced bidding wars), Los Angeles (86.1%), Orange County (83.9%) and San Diego (72.6%). Boston rounded out the top five with 68.1% of Redfin offers facing competition.

San Diego and Orange County posting the largest month-over-month declines in May, seeing 16.4 and 10.3 percent drops in the percentages of Redfin offers facing bidding wars. Nearly half (49.0%) of Redfin’s winning offers were higher than the asking price, a slight drop from 51.9% last month.

Pre-inspections (a competitive strategy in which the buyer has the home inspected before submitting an offer so that they can safely waive the inspection contingency) are distinctly regional, included in 18.2% of Seattle offers, 3.3% of Washington DC offers, and 2.7% of Baltimore offers. Pre-inspections were not part of the winning offers in any other city.

The table below ranks the hottest real estate markets in order of competitiveness.

Citing new quarterly data compiled by HomeVestors (known as the “We Buy Ugly Houses®” company) and national real estate forecaster, Local Market Monitor, Hicks said that in the top 100 housing markets in the U.S., only one-Providence, Rhode Island–is categorized as “dangerous” for investors. The HomeVestor/Local Market Monitor Best Market Ratings, issued quarterly, concentrate on factors that affect the demand for housing and therefore affect home prices. The potential for price increases is the investment opportunity, the potential for price decreases or stagnation is the investment risk.

“Five of the 11 markets where the price run-up has driven the EHP into positive territory are in California, with the Los Angeles-Long Beach-Glendale market leading the pack. Average home prices now running 19 per cent above the EHP for that market,” said Ingo Winzer, president and founder of Local Market Monitor. The EHP, or Equilibrium Home Price is a measure of how much a market is over-priced or underpriced relative to local income.

“Markets with a positive EHP can still provide strong rental returns for investors,” Winzer said, “since most of those markets have strong population and job growth which provides upward pressure on rents.

“The San Jose market is a good example,” he continued. “Although the EHP is six percent, strong population growth provides a good source of renters, making it a ‘low risk’ market according to our data.”

Winzer also thinks the sharply higher prices in some markets will be difficult to sustain. “They’re more the result of a short-term shortage of inventory rather than a long-term recovery of demand,” he noted.

Investors should weigh the data carefully according to their risk preferences before making a decision about investing in a market,” said HomeVestors co-president Ken Channell. “For those who can handle more risk, markets ranked as ’speculative’ in our data could provide more upside potential.”

Despite the record-setting increases in home prices this year, there is still plenty of room in most markets for prices to move even higher, and that’s good news for investors in single family homes according to David Hicks, co-president of HomeVestors of America

“Even though housing prices in Providence are still 12 percent below their EHP level, the weak jobs market and relatively high unemployment depresses demand for rental properties,” said Ingo Winzer,

Of the top 100 markets, there are 13 ranked as “speculative,” all of them in Northeast or the Midwest. “Most of these markets have higher than average unemployment rates, but have other factors such as home prices well below the EHP, strong rents or continued population growth that make them particularly attractive investments,” Hicks said.

“What we have learned over the last 16 years with our HomeVestors® franchisees buying more than 50,000 houses allows us to analyze individual neighborhoods for sales trends and rental rates,” Channell said. “This information can help investors determine a purchase price for a property that may allow them to build equity over the long term while generating rental income immediately.”

The quarterly data categorizes all U.S. markets according to different investor risk preferences including Dangerous, Speculative, Medium Risk and Low Risk. California leads the nation in the number of markets ranked “low risk” with 14. Texas is next with 12 markets ranked as low risk and Florida is third with 11.

But, Winzer cautions “Not all low risk markets are equal. When you factor in job growth and unemployment, it’s clear that some markets like Texas have better long-term potential than a market like Florida.”

Markets can be ranked as “low risk,” “medium risk,” “speculative” and “dangerous” depending on their numerical score of minus-ten to plus-ten based on population, job growth, unemployment, home price changes, the market’s equilibrium home price and the 12-month home price forecast.

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.

Investor purchasing intentions have changed significantly since ORC surveyed investors in August, when only 30 percent said they planned to buy fewer properties in the next 12 months than they did in the previous year. In the latest survey, the percentage of investors who said they plan to cut back on purchases in the coming year has risen to 48 percent. Only 20 percent of investors said they plan to increase purchases compared to 39 percent ten months ago.

While they may be buying fewer new properties in the year to come, over half of investors who own rental properties plan to hold them for at least five years or more. One-third, 33 percent, of investors plan to keep them for 10 years or more.

“Higher prices are reducing returns on investment and investors are responding by cutting back on their purchasing plans until conditions sort out. Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good ideals on distress sales,” said Chris Clothier, partner in MemphisInvest.com and Premier Property Management Group.

“On the other hand, investors are planning to hold onto their rental properties for at least eight to ten years and realize the benefits of rising rents and low vacancy rates. Cash flow is much more important than appreciation,” said Clothier.

Real estate investors play a major role in the national housing economy. Investors purchased 24 percent of all existing homes sold in 2012, a decline from 27 percent in 2011, according to the National Association of Realtors. The drop in purchasing intentions could result in a further decline in investor market share in 2013.

Single-family rentals are the fastest growing component of households, expanding over 25 percent since the 2005 peak in homeownership, according to Zelman & Associates. The number of renter-occupied singe family detached homes is about 11.4 million, almost 2.1 million (or 22 percent) higher than in 2006, according to the Census Bureau.

How those who do plan to make purchases will pay for them has also changed over the past ten months. In August, nearly one out of four investors said they will use all cash on their next purchase and the balance would use some form of financing. Today the percentage has increased to 37 percent. Most investors today plan to use a commercial mortgage.

“Cash sales make sense when prices are rising. They lower investors’ costs,” said Clothier.

About half of investors said real estate investing is harder today than when large numbers of foreclosures started five years ago. The entry of institutional investors into residential real estate is often cited as a source of competition for properties and a reason foreclosure inventories are shrinking, but only 13 percent of investors in the survey said the large competitors have impacted their businesses while 54 percent said they have experienced no impact at all.

However, more than half of the investors participating in the survey said they believe that five years from now there will more real estate investors than there are today.

“The reasons people invest in real estate-cash flow, passive income for retirement, exceptional return–will be as important five years from now as they are today,” Clothier said.

The study was conducted using ORC International’s CARAVAN Omnibus survey using both landline and mobile telephones on May 2-5/9-12/16-19 2013 among 3020 adults, 1,507 men and 1,513 women 18 years of age and older, living in the continental United States. Some 1,970 interviews were from the landline sample and 1,050 interviews from the cell phone sample.

Do you plan to purchase more, the same number or fewer properties in the NEXT 12 MONTHS than you did in the PAST 12 MONTHS?

How long do you plan to hold the rental properties that you own or plan to buy in the next 12 months? Would you say…

How have you paid for or how will you pay for all the investment properties you own or plan to buy in the next 12 months? Would you say…

Do you think real estate investing is easier or harder today than it was when large numbers of foreclosures started five years ago?

Do you think there will be more or fewer real estate investors five years from now than there are today?

Large institutional investors, or hedge funds, are buying and managing large numbers of foreclosures. What impact have hedge funds had on your business? Would you say…

Excluding distressed sales, home prices increased on a year-over-year basis by 11.9 percent in April 2013 compared to April 2012. On a month-over-month basis, excluding distressed sales, home prices increased 3 percent in April 2013 compared to March 2013. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that May 2013 home prices, including distressed sales, are expected to rise by 12.5 percent on a year-over-year basis from May 2012 and rise by 2.7 percent on a month-over-month basis from April 2013. Excluding distressed sales, May 2013 home prices are poised to rise 13.2 percent year over year from May 2012 and by 3.1 percent month over month from April 2013. The CoreLogic Pending HPI is a proprietary and exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

“House price growth continues to surprise to the upside with an impressive 12.1 percent gain year over year in April,” said Dr. Mark Fleming, chief economist for CoreLogic. “Increasing demand for new and existing homes, coupled with low inventory, has created a virtuous cycle for price gains, most clearly seen in the Western states with year-over-year gains of 20 percent or more.”

“The pace of the housing market recovery quickened in April as home prices rose across the U.S.,” said Anand Nallathambi, president and CEO of CoreLogic. “For the second consecutive month, all 50 states registered year-over-year home price gains excluding sales of distressed homes. We expect this trend to continue, bolstered by tight supplies and pent up buyer demand.”

Highlights as of April 2013:

• Including distressed sales, the five states with the highest home price appreciation were: Nevada (+24.6 percent), California (+19.4 percent), Arizona (+17.3 percent), Hawaii (+17 percent) and Oregon (+15.5 percent).
• ncluding distressed sales, this month only two states posted home price depreciation: Mississippi (-1.7) and Alabama (-1.6 percent).
• Excluding distressed sales, the five states with the highest home price appreciation were: Nevada (+22.6 percent), California (+18.3 percent), Idaho (+16.4 percent), Arizona (+15.3 percent) and Washington (+13.9 percent).
• Excluding distressed sales, no states posted home price depreciation in April.
• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to April 2013) was -22.4 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -16.3 percent.
• The five states with the largest peak-to-current declines, including distressed transactions, were Nevada (-47.3 percent), Florida (-40.5 percent), Michigan (-36.1 percent), Arizona (-36 percent) and Rhode Island (-34.7 percent).
• Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 94 were showing year-over-year increases in April, the same as in March 2013.