Real Estate Investors Shy Away From Buying 'Deal' Homes

Prospects have improved for homebuyers who were frozen out of the American dream by investors who plunked down cash to buy houses in distressed markets.

Institutional investors and all-cash buyers purchased fewer homes in Pittsburgh and across the nation than in the previous year as rising home prices and the improving economic fortunes of homeowners have driven foreclosures down, according to RealtyTrac data released Friday.

The tighter market has made it more difficult to find bargains, persuading some investors to pull out of markets in which they have "picked the bone dry," said Daren Blomquist, vice president of RealtyTrac.

The question now will be who takes their place.

"One of the most important trends we'll be looking at is whether as the cash buyers are dying down, that's opening the door for more traditional buyers to come into the market," he said.

Peggy Bastien, a Realtor who buys investment properties for cash in the South Hills, searched for a year before finding a home she liked in South Park. Bastien looks for houses she can fix up and sell for $20,000 to $30,000 profit. In the past, it would take her a few months to find those opportunities. But the market has become more competitive.

"Houses are going quicker," she said. "You look at something, and you have to jump on it right then. You can't drag your feet. You have to have your money ready."

The average home sales price rose 3 percent in the Pittsburgh region last year, and properties sold 3.5 days faster, according to West Penn Multi-List Inc. Meanwhile, foreclosure filings declined 13 percent, according to real estate information provider RealtyTrac.

Pittsburgh's relatively stable market made it less attractive to outside investors who flocked to places like South Florida and Nevada, which experienced big price swings during the housing boom and bust. This area has had a decline in cash buyers and investors.

Institutional investors — or those that purchase at least 10 properties a year — accounted for 2.4 percent of all home sales in the fourth quarter of 2014, down from 3.1 percent in the period a year ago, according to RealtyTrac. Cash sales were down as well, to 35 percent of all sales, compared with 36.5 percent in the year before.

The trend has played out across Pennsylvania and the nation. Institutional investors accounted for 2.3 percent of Pennsylvania home sales at the end of 2014, down from 3.7 percent the year before. Nationwide, institutional buyers were 3.7 percent of sales, down from 5.4 percent.

The percentage of cash sales declined by 2.1 percentage points in Pennsylvania, to 36.2 percent at the end of last year, and 3.6 percentage points in the United States to 30.3 percent.

©2015 The Pittsburgh Tribune-Review. Distributed by Tribune Content Agency

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