Press Release: June 24, 2013

 

Growing Evidence of Investor Pullback from Housing Market
Found in Mays HousingPulse Tracking Survey Results

 

WASHINGTON, DC (June 24) Rising home prices and increased competition for home purchases in many parts of the country have resulted in some investors dropping out of 2013s resurgent housing market, a new national survey reveals.

According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, the investor share of home purchases tumbled from 22.0 percent in April to 20.2 percent in May based on a three-month moving average. That was the sharpest drop in investor activity recorded in more than three years.

Meanwhile, both current homeowners and first-time homebuyers increased their participation in the home purchase market between April and May. Current homeowners accounted for 43.8 percent of home purchases last month while first-time homebuyers represented 36.0 percent in May, HousingPulse results showed.

And there was more evidence of an investor pullback from the housing market in the May HousingPulse numbers. The Investor Traffic Index, an indicator of future home purchase activity, was down for three months in a row ending in May. In comparison, the Current Homeowner Index and First-time Homebuyer Index both only started to seasonally ease downward in May.

In recent years, investor home purchase activity has been concentrated among damaged foreclosed properties or so-called Real Estate Owned (REO) as well as short sales, since these two property types generally offer discounted pricing and provide more profitable opportunities for renting or flipping.

But the latest HousingPulse numbers reveal investor purchases of both damaged REO and short sales fell significantly in May based on a three-month moving average. Comments from survey respondents indicate that profit margins have been squeezed by rising prices, reducing incentives for investors to buy.

The drop in investor interest in both the damaged REO and short sales sectors has correlated with a drop in the sales-to-list price ratios for these properties, HousingPulse results show.

HousingPulse respondents in May were asked to report on investor purchases and imputed sales of rental properties. Real estate agents reported that investors are buying fewer short sales because of long delays in closing, during which time property values might decline. Survey results also show that small investors are selling off their inventory of rental properties.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,000 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

For more information on the survey, contact John Campbell at Campbell Surveys at (202) 363-2069 or jcampbell@housingpulse.com

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6/24/2013