Real Estate Investors: It’s Still a Good Time to Buy Houses

Contributing Writer, B2R Finance | Real Estate,Real Estate Investment

Confidence in Real Estate Market

Investors still have plenty of confidence in the U.S. housing market and believe it is a good time to buy homes, despite rising prices.

A recent National Association of Realtors (NAR) survey says 84 percent of investment buyers say now is a good time to buy, according to the association’s “Investment and Vacation Home Buyers Survey 2014.”

The survey says 60 percent of investment property buyers are likely to buy another property within the next two years and 51 percent of vacation homebuyers likely will buy an investment property during that time period.

The nation witnessed a robust recovery in home prices in the first half of 2013 as low mortgage rates and affordable homes enticed buyers, but the recovery lost some steam after that. Price increases dampened and low inventory coupled with tight credit held the market in check.

REO inventory, a favorite of single-family home investors, has become harder to find at attractive prices. NAR’s survey shows the sales price for investment properties has risen for the third straight year, clocking in at a median price last year of $130,000, up 13 percent from $115,000 in 2012.

Auction.com’s Rick Sharga noted in a recent HousingWire article that good deals can still be had on distressed property if investors are willing to look at short sales and trustee sale properties at foreclosure auctions to augment their REO purchases.  Some investors are even buying at retail from the MLS or purchasing rental assets that are already have a tenant in place, Sharga notes.

Cities such as Phoenix and Las Vegas, which both had significant numbers of low-priced REO a couple years ago, have seen significant price increases. That is driving investors to better-priced deals in tertiary markets — smaller cities that have seen more moderate price increases, or cities where housing, historically, has been more affordable.

To be sure, not as many are buying. The share of home sales that were investment purchases declined last year to 20 percent, down from 24 percent in 2012, but investment buyers remain engaged and open to new possibilities.

The survey results revealed that 84 percent said it was a “good time to purchase” and only 10 percent surveyed said it was “not a good time to purchase” an investment property.

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