Prediction: 3 times more investors than owner-occupants
New survey finds significant investor interest in buying homes, and many don't expect to pay all cash. They're not planning quick flips, either.
Who is planning to buy homes in the next two years?
"This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical deal-driven flippers that buy and sell properties quickly," Move Chief Executive Officer Steve Berkowitz said in a news release.
According to the survey, 50% of the prospective real-estate investors plan to hold their properties for five or more years, and only 11% expect to sell within a year of their purchase.
Though all-cash buyers make up a significant percentage of those buying homes today (31% in April), 75.5% of investors expect to borrow at least some of what they need. The survey didn't indicate how they'd accomplish that, but 57% of those surveyed said finding financing is a challenge.
Post continues below video
The investors expect the problems that conventional homebuyers are having getting mortgages will help them compete for the best properties.
"The fact that most real-estate investors plan on combining cash and credit for their purchases goes against the conventional wisdom that investor transactions today are mostly cash-only sales," Berkowitz said.
The survey echoes the findings of a poll by Econohomes, which reported in March that small investors were playing a key role in the market. "Our overriding conclusion from this report is that small, local investors are a critical ingredient in the recipe to solve the housing crisis and stabilize the economy as a whole," Econohomes concluded.
Here are some other findings of the Move.com survey on investors:
- 22% expect prices to rise in the next six to 12 months, 23% expect prices to fall and 53.5% expect prices to remain about the same.
- 59% are new to real-estate investing, and only 36.5% have made more than one purchase.
- 65.7% don't expect repair costs to exceed 20% of the purchase price.
- 48% expect a profit of 20% or more from their investment, or a 4% annual return over five years.
- 27% plan to buy a personal residence as their first investment.
- 30% are interested in buying retirement property as an investment.
Thursday, May 26, 2011 9:37 AM?
22% expect prices to rise in the next six to 12 months, 23% expect prices to fall and 53.5% expect prices to remain about the same.I wonder what that 22% thinks now, after these last 2 weeks. Increasing unemployment isn't going to be leading to higher real estate prices in the short term.
Yes, investor buying is an absolute reality. Why? Because the minute a house is on the foreclosure list it is advertised by a plethora of real estate websites. Not only local real estate companies but foreign, as well. The result is that houses in my area are being snatched up sight unseen. Who are my neighbors going to be? No clue. I hope they are of my cultural and religious beliefs. One thing I am certain of is that somebody is making a fortune of these sales.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.