Repeat home buyers fuel housing recovery

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(MoneyWatch) Across most of the country, home prices remain affordable and rents continue to rise. And while today's investors are helping the housing recovery, they're not completely responsible. Data from the National Association of Realtors (NAR) suggests that traditional repeat buyers are driving today's market.

According to a recent joint survey by BiggerPockets.com and Memphis Invest, 39 percent of investors plan to buy more properties over the next 12 months than they did over the last year. Twenty-six percent of investors plan to purchase the same number of properties.

"Though housing markets are changing across the nation, investors are still seeing great opportunities. Hundreds of thousands of foreclosures and short sales are coming to market and rents are continuing to improve in most markets, creating a positive environment for the nation's 2.81 million residential real estate investors," Joshua Dorkin, founder and CEO of BiggerPockets.com, said in a press release.

"They will certainly continue to be major player in the nation's housing economy for the foreseeable future," he added.

According to the survey, one out of eight -- or 28.1 million Americans -- either consider themselves to be residential real estate investors or own residential investment properties today, according to the survey. That high number is not surprising when you consider many homeowners are renting out properties they'd rather sell.

NAR data shows investors accounted for an average 22 percent of the market share from 2003 to 2011.

There are perks to investors taking an active interest in today's real estate market. With millions of Americans actively investing in real estate, billions of dollars are being poured into repairs. The results of the survey reveal that real estate investors are spending more than the Department of Housing and Urban Development (HUD) to rehabilitate neighborhoods.

Recent NAR data suggests that investors absorbing the over-supply of inventory helped stabilize the housing market. Residential real estate investors have spent more than four times the amount of money HUD's Neighborhood Stabilization Program has to repair foreclosed and short-sale homes, the BiggerPockets.com/Memphis Invest survey says.

At a median expenditure of $7,500 per property owned, investors are spending a total of $9.2 billion per year to repair the damage caused by foreclosures. By comparison, Congress has authorized a total of about $7 billion for the Neighborhood Stabilization Program over the past four years.

Investors continue to purchase single-family homes as investment property

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Chris Clothier, a partner with Memphis Invest, believes investors are improving neighborhoods and driving local economies. They are purchasing properties that would otherwise sit vacant for months, dragging down area home prices, and using local electricians, plumbers and labor to update the homes. "Those dollars provide jobs and put money into local economies. It's clear that investors are the ones who are risking their own money to improve and stabilize neighborhoods for new owners or tenants," Clothier said in a press release.

Investor activity has benefited the housing market, but there's a downside too. "Investors have been largely purchasing with all-cash, which puts first-time buyers at a significant disadvantage," Walter Molony, a NAR spokesman, said in an e-mail. "Both investors and entry-level buyers have been focused on low price ranges, with investors winning the deals since they don't have a need for financing."

Molony points out that the situation has flipped in 2012, as the supply-demand situation is now balanced in much of the country -- except for the West and Florida, where NAR says housing shortages are putting pressure on home prices.

So while the BiggerPockets.com/Memphis Invest survey shows investors planning to continue purchasing and rehabbing property, NAR data shows the overall investor market share is on the decline. The drop started in March, and since April investor market share has averaged 18 percent -- below its long-time average of 22 percent.

Investors certainly help fuel the housing recovery, but NAR data shows they aren't the driving force. "First-time homebuyers are also below their long-term average with housing shortages in the low price ranges and a headwind of tight credit," notes Molony. "At present, the market is being driven by an increase in traditional repeat buyers."

[callvolley.com]

I do not know where the vacant houses are. In Houston listings are own over 25% and buyers have increased dramatically. As a Houston Realtor, I have had multiple offers for every single house I was lucky enough to list this year. The offerings remain scarce because homeowners are not willing to list until the price rises substntially more, which is happening almost everywhere. It is definitely a seller's market.

Buyers do not seem to understand the changed market yet. Many are still trying to low-ball offers and are just wasting their time. In most cses it is not even worth my effot to present an offer that is more than 3% under the asking price. By the time you get the seller's agent on he phone, they already have 2-3 offes some higher than the asking price.

Investors, who generally have to make up the cost of repair, commissions, holding costs and interest are being squized becasue they are forced to offer higher and higher prices to purchase rehab properties.

All in all next year looks to be a bull market in real estate.

Volley Goodman
Owner/Broker callvolley.com

[ChristopherDC]

Actually Licentia_Liquendi - foreign real estate buyers make up less than 7% of the U.S. housing market with a vast majority, over 34%, coming from Canada and they are buying properties in destination areas such as Phoenix, Vegas, Orlando, etc... Buyers from Europe and South America make up the next biggest block with buyers from Asia making up less than 4% of the total for foreign investors.

93% of all U.S. real estate transactions are still completed by U.S. nationals and real estate investors made up a little more than 1/3 of all sales last year. When looking at some of the worst hit markets that are in the most need of help - it is mom and pop investors who are stepping in and buying rental property.