Overeager investors who bought multiple homes during the housing boom share some of the blame for the market’s eventual crash. Now they are being credited with playing a big part in reversing the downturn.
“Investors are buying homes at a more rapid pace than ever before, and this time their investments actually make sense,” says Erik Franks, an analyst with
Most investors are buying homes below replacement costs, or at prices that allow for a reasonable rental return, helping to clear the market of an overabundance of inventory, Franks reports in the latest edition of the Burns’ company newsletter, U.S. Building Market Intelligence.
The firm analyzed 167 metro areas and found that investors accounted for nearly three out of every ten sales in the first quarter, up from 24% in the fourth quarter of 2009. And the company’s on the ground research indicates that second quarter investment activity has exceeded the first quarter.
“In fact,” Franks says, “John Burns just recently sat next to someone from Toledo who was flying to Orange County, Calif., to flip homes!”
Interestingly, investor activity has been especially strong in markets were values crashed the most. Half the homes being sold in Las Vegas are going to investors, as are 46% of the sales in Phoenix, according to the firm. Other hot investor markets include Stockton, Riverside-San Bernardino and Sacramento in California, as well as Miami.
Some small markets also are seeing heavy investor activity, including those in inland California. Second home buyers are sensing bargains, too, causing big price jumps in Naples and Panama City in Florida, and Tucson, Ariz.
“The naysayers will surely point to these facts as a false recovery,” says Franks. “While they are technically correct, we are not concerned at all, and are embracing the return of private capital.”
