More homes are being bought by investors and their purchases are concentrated among first-time buyers, making it even more difficult for first-time buyers to access the housing market, according to a new analysis.
Investors ordered 11.3% of all purchases in 2018, according to CoreLogic, a real estate data company responsible for the report. This is the highest level since 1999, and even dwarfs of activity between 2012 and 2014, when the housing market was still mired in distress and large financial institutions with deep pockets burst in.
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For starter houses, investors represent one in five deals, CoreLogic said.
What’s remarkable about recent activity is that smaller investors, not large financial institutions, are driving the rise. The share of large investors rose from 24.3% in 2013, in the wake of the crisis, to 15.8% last year.
Investors who bought 10 or fewer homes were responsible for 60% of transactions in 2018, up from 48% in 2013. And these family investors buy entry-level homes: 20.3% of them in 2017 and 2018 .
Perhaps because low-cost homes are more plentiful in colder-growing metropolitan areas, housing markets with the highest share of investor activity are not very promising. Detroit, Philadelphia and Oklahoma City are among the top five communities with the most investor activity. (Memphis, which has been known for some time as a hotbed for the single-family rental boom, is too.)
In markets where investors are more present, there are fewer housing stocks. But CoreLogic cautions against blaming them for the housing shortage. “While it is certainly possible that an increase in the number of investors in a market will increase competition and reduce supply relative to aggregate demand, the reverse is also possible: markets with tightening market demand. supply could attract investors as they perceive the markets with lower supply with more abundant supply, ”the group wrote.
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