Rising home prices haven’t deterred investors from the housing market, according to a new survey by real estate-centered companies BiggerPockets.com and Memphis Invest. In fact, nearly 40 percent of real estate investors say they plan to purchase more properties over the next 12 months than they did last year. Twenty-six percent say they plan to buy as many as they did last year, according to the survey.
Investors have made up a big part of the housing market in recent months. Investors bought 1.23 million homes last year—a nearly 65 percent increase over the 749,000 they purchased in 2010, according to the National Association of REALTORS®.
"Though housing markets are changing across the nation, investors are still seeing great opportunities,” says Joshua Dorkin, CEO of BiggerPockets.com, a real estate investing social network. “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 28.1 million residential real estate investors. They will certainly continue to be major players in the nation's housing economy for the foreseeable future.”
Investors reported spending money to rehab the properties they purchased too—$7,500 on average per property, according to the survey. Overall, the survey found investors spent $9.2 billion last year to rehabilitate the foreclosures they purchased.
"This survey puts some hard numbers behind the contribution that investors are making toward not only improving neighborhoods and fighting blight, but also the toward driving the economy,” says Chris Clotheir, a partner with Memphis Invest, which provides single-family rental real estate investment services. “Investors are purchasing homes that in some cases sit for months and add a drag on local home prices. This survey shows that those investors are driving their local economies by spending billions in repair costs with local electricians, plumbers, flooring companies and laborers just to name a few.”
The survey found that investors would buy even more homes if interest rates were even lower; there were additional tax incentives for purchasing, rehabbing and renovating investment properties; and if lenders eliminated their limits on loan amounts.