Over 10% of all residential homes are purchased by investors, and that number continues to rise. Who are these investors?
Many have speculated that the large institutional conglomerates such as Blackstone, American Homes 4 Rent, and Colony Starwood dominate investor purchases. However, a special report on investor home buying by CoreLogic, Donāt Call it a Comeback: Housing Investors Have Been Here for Years, shows this is not the case.
Ralph McLaughlin, CoreLogicās Deputy Chief Economist and author of the report, explained his findings at the recent National Association of Real Estate Editors conference in Austin:
āInvestor buying activity in the U.S. is at record highs. And our records go back confidently, about 20 yearsā¦
Whatās going on and why? Well, it turns out, itās not the big institutional guys that are leading the increase in home buying. Itās actually the smaller guys. Itās those that have bought between one and ten properties over this 20-year period, theyāre the ones that are really leading the increase in investor home buying.ā
Here is the breakdown of the percentage of purchasers by type of investor over the last six years according to the report:As the graph shows, the percentage of āMom & Popā investors is currently dominating the number of homes purchased by investors, as the percentage of homes purchased by both professional and institutional investors is falling.
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Bottom Line
Most houses purchased by an investor are bought by small investors looking to diversify their financial portfolio by adding a real estate component. If you are investing in real estate as either a landlord or someone who fixes-up and flips the house, letās chat about the ways you can build or liquidate your current portfolio of properties.
