Can Investors Make Good on Housing Bets?

September 5, 2013

Investors have placed high bets on housing in recent years, purchasing distressed homes in bulk. Now it may be time for them to prove that their bets are going to pay off. 

Investors have been cooling on the market recently because of rising home prices and a more limited inventory of distressed properties. Investors made up 16 percent of home buyers in June, a drop from 22 percent in February, according to the National Association of REALTORS(R). Instead of continuing on a home-buying spree, investors are now focusing on making sure the houses they have snatched up are profitable and occupied by renters, CNBC reports. 

"What you're seeing in housing overall is a bit of a pause as the market digests what's happening," says Colony Capital’s Justin Chang. "We are in the early days of a long recovery."

Aaron Edelheit of The American Home, which owns 2,500 single-family rental homes nationwide, says that rental demand is high and management appears to be working. Still, he foresees consolidation coming, with some larger investment firms that have stronger management structures buying up the smaller investment players. Smaller investors may be more likely to move on, having “exhausted their cash and their credit opportunities,” CNBC notes. 

Source: “As investors shift, housing is the new stock market,” CNBC (Aug. 27, 2013)

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