New investors reach highest level in decades

[Nathan Gesner]

https://magazine.realtor/daily-news/2019/06/21/watch-out-first-time-buyers-mom-and-pop-investors-are-swooping-in

Home purchasing activity among investors has reached the highest level in the past two decades, shows a new report, “Investor Home Buying,” released by CoreLogic. The increase isn’t from the big institutional buyers of recent years, the report says, but from more smaller investors entering in.

Investors appear to be homing in on the starter home tier for their purchases, which is giving first-time home buyers more competition, CoreLogic notes.

By the end of 2018, the investment rate in the U.S. housing market stood at 11.3%—the highest rate in CoreLogic’s records, dating back to 1999.

Following the Great Recession, large institutional investors made up the bulk of investment activity. But that has shifted as more smaller investors have started stepping in.

Small or “mom-and-pop” investors—those who purchase 10 homes or fewer—have grown from 48% of all investor-purchased homes in 2013 to more than 60% in 2018.

Large investors—those who purchased more than 101 homes—nearly doubled their activity between 2000 and 2013. However, they’ve pulled back since the foreclosure crisis and now comprise about 15.8% of purchases, the report shows.

Medium-sized investors—those who purchase between 11 and 100 homes—have also gradually been decreasing their market share, falling from a peak of 30% in 2010 to 22.7% in 2018.

First-time buyers may be seeing more competition from investors. The share of starter homes purchased by investors  peaked at one in five homes over the last two years, at a rate of 20.3% in 2017 and 2018, the report shows.

Researchers also found that larger increases in investor activity with lower tier homes over 2012 to 2018 is “strongly correlated” with tightening housing market conditions in those markets where they’re most present.

The markets with the highest investor activity in 2018, according to the report are:

Detroit: 27% (investor purchase share)

Philadelphia: 23.3%

Memphis, Tenn.: 19.7%

Long Island, N.Y.: 18.8%

Oklahoma City: 18.7%

Atlanta: 18.5%

Des Moines: 17.2%

Baltimore: 17.2%

Camden, N.J.: 16.7%

Cleveland: 16.7%