Investors Prop Up Real Estate Market

real estate investorsWant to know who bought that house up the street? Chances are, it was an investor.

Real estate investors are buying three homes for every one house bought by someone for their personal use, according to a study released today. And it's a pattern that's likely to continue in the next two years.

Today's investors are different from those a decade ago who bought homes and would flip them as fast as a stack of burning pancakes. Only 11 percent of today's investors expect to sell the property within 12 months, and 50 percent said that they plan on holding on for at least five years. Interestingly, the study found that only 36.5 percent of today's investors have experience in more than one property transaction.

"This data suggests today's climate is hot for investing and is attracting a lot of new people that don't fit the stereotypical deal-driven flippers that buy and sell properties quickly," said Move, Inc. Chief Executive Officer Steve Berkowitz. "They're mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties."

Joshua Dorkin, founder of the Bigger Pockets website for real estate investors, says that savvy investors are definitely coming out in force. It remains to be seen what the implications are for the housing market overall, as more inventory moves from owner-occupied to rental units, he noted. Will rent prices decrease as more units become available?

While many investors are homegrown, there is a sizable segment of foreign investment occurring as well. Canadians are snapping up properties, many hoping to escape the Canadian winter with a warmer-climate home. A recent story in the National Post said that one in five Canadians was thinking of buying something in the U.S. -- that's a lot of Canadians.

Another large bloc of investors is coming from mainland China and Hong Kong. It's been reported in the China Economic Review that 11 percent of all residential sales in the U.K. are by investors from China and Hong Kong. Closer to home, Napa Valley agent Henry Schlangen of Pacific Union International Inc. reported a strong buying interest on the part of Chinese nationals.

"They are learning about the Western lifestyles," he said. "These are trophy properties."

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