Investment home sales up 64.5% – at highest level since 2005

The National Association of Realtors – NAR’s “Investment and Vacation Home Buyers Survey 2012”, covering existing- and new-home transactions in 2011, shows investment home sales surged 64.5 percent to 1.23 million last year from 749,000 in 2010.

Lawrence Yun, chief economist at NAR says investors (ususally with cash) took advantage of the favourable market conditions in 2011 by swooping into the market to take advantage of bargain home prices. Rising rental rates that easily beat the banks low interest rates is another reason for investors to look into real estate. More than 40 percent of investment buyers purchased more than one property.”

“The shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market” Yun said.

“Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period,” he said. “Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it’s best to rely on the expertise of local businesses, nonprofit organizations and government.”

All-cash purchases have become fairly common, 49 % of investment buyers paid cash last year. Half of all investment home purchases in 2011 were distressed homes.

“Clearly we’re looking at investors with financial resources who see real estate as a good investment and who aren’t hesitant to use cash,” Yun said. Of buyers who financed their purchase with a mortgage, large downpayments were typical.

The situation for investment homes in Sarasota Florida is very similar to the above description. REO’s (bank owned properties) are generally speaking sold quickly (if priced right) and multiple offer situatuions are very common. Also here in Sarasota the rental market is very good. We have recently rented a few condos on a yearly basis at very good rental rates and they were all rented within a day after we put them on the market.

Per Nordstrom
Realtor in Sarasota, Florida
at Premiere Sothebys International Realty

Per & Helena Nordstrom

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