Southern Hospitality: Investors Flock to the South for Single-Family Housing
Buyers like the South and urban/suburban properties best when it comes to purchasing single-family homes as investment properties.
The National Association of Realtors® says 63 percent of investment buyers last year purchased property in suburban or urban areas, while 30 percent tapped small towns or rural areas. Just 7 percent invested in resort areas.
The South (38 percent) and the West (25 percent) were the most popular locations for investors buying residential properties last year, according to the “2014 NAR
Investment and Vacation Home Buyers Survey.”
The Northeast (18 percent) was the least popular region of the country for investment purchases with lack of interest potentially due to a variety of challenges, including expensive housing that’s not appreciating as fast as markets in the West.
The Midwest also lacked favor with just 19 percent of investment purchases in that region last year despite it having four of the five lowest cost metros for housing prices. A challenging landscape, such as high unemployment rates in low-cost areas, such as Rockford, Ill., kept the majority of investors away.
HOMES vs. APARTMENTS
Single-family homes became a hot commodity among small, midsized and large institutional buyers as home prices bottomed in 2012. That interest has cooled somewhat as home prices have risen, but single-family homes remain the most popular type of housing purchased, according to the survey.
NAR said 63 percent of investment properties purchased last year by the survey’s participants were single-family detached homes and 16 percent were small condos or duplexes with two to four units. Fewer bought larger condos/apartments (11 percent); townhomes or row houses (8 percent) or other properties (4 percent).
Most investors surveyed bought properties between 1,501 and 2,000 square feet (31 percent) — below the nation’s median square footage of 2,169 square feet, according to the U.S. Census Bureau. And, 26 percent were buying even less square footage — 1,001 to 1,500 square feet. The median for all investment purchases was 1,690 square feet.
Investment buyers were also willing to venture away from their primary residence with 30 percent going 101 miles or more away from home to buy an investment property. Still, home is still where the heart — or money is — as 50 percent of investors bought within 20 miles of their primary residence.
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