Investor Activity Increasing

With housing affordability at attractive values, there has been a gradual increase in investor activity within the housing market. Looking to snatch up bargains for either resale or rental opportunities these investors are able to complete transactions more rapidly with cash nearly always being the method of purchase. Rental vacancies have been on the decline and rental rates on the upswing, making it a nearly ideal time for investors when coupled with lower purchase prices for homes. In many markets across the country it has become more expensive to rent rather than purchase, which may cause some hesitant buyers to take the plunge.

The recent loss of home values has brought home prices much closer to affordable levels for the average family. According to the National Association of Homebuilders/Wells Fargo Housing Opportunity Index (HOI) 73.9% of all homes sold in the fourth quarter of 2010 were affordable to families making the national median income of %64,400. This is also the eighth consecutive period the index has been over the 70% threshold and this recent quarter sets a record for the HOI since its inception. Prices are at affordability levels not seen in the past 20 years. A market rebound will take continued job creation, which recently has seen the unemployment rate dip to 8.9% as over 200,000 jobs were created last month, and affordability in relation to income levels.

But until a mass of homebuyers arrives it is likely investor activity will stay strong as they continue to pick up values on distressed properties in the market. Even pessimistic reports of potential continued value decline are less likely to keep people away at this point since a 10 – 15% drop in value at this point represents a fraction of what it would have with the higher prices of three years ago. While the real estate market still faces many hurdles and a recovery to “normal” transaction levels will take some time, there are many bright indicators of hope emerging that the light isn’t too far off now.

Stephen Woodall
REALTOR, GRI @ Long Realty Company
Stephen has made real estate his full-time career and passion since 2008, primarily specializing in the Foothills & the Northwest Tucson areas of Oro Valley and Marana. He is a multi-million dollar producer, representing both sellers & buyers. Stephen has tremendous experience in new home sales, listing & selling primary residences, listing & selling vacant land, listing & selling luxury homes, investment properties, rentals, and real estate development parcels.

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