The Major Players Driving the Housing Market?
October 9, 2012
Despite high affordability in housing, first-time home buyers are not the ones currently fueling the market. It's repeat home buyers who are driving today’s housing market, according to recent housing surveys.
Nearly 40 percent of investors say they plan to buy more properties over the next year than they did last year, while 26 percent of investors say they plan to purchase the same number of properties in the next 12 months, according to a survey by BiggerPockets.com and Memphis Invest.
"Though housing markets are changing across the nation, investors are still seeing great opportunities,” says Joshua Dorkin, founder and CEO of BiggerPockets.com. “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. They will certainly continue to be major player in the nation's housing economy for the foreseeable future."
Investors accounted for about 22 percent of the buyer market share from 2003 to 2011, according to the National Association of REALTORS®.
But the flood of investors to the market also can have a downside on the housing market.
"Investors have been largely purchasing with all-cash, which puts first-time buyers at a significant disadvantage," Walter Molony, NAR spokesman, told CBS News. "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."
As such, first-time home buyers are below their long-terms averages as housing shortgages in the low price ranges grow, and more first-time buyers struggle to qualify for credit, says Molony.
Source: “Repeat Home Buyers Fuel Housing Recovery,” CBSNews.com (Oct. 8, 2012)
Updated: February 14, 2020