Home Prices Catching up with Investors

by 29 Aug 2012

(TheNicheReport) -- Home prices across the United States are beginning to rise in some housing markets, and busy real estate investors have been very influential in what seems to be the early stage of an American housing recovery. Individual buyers and sellers are still a bit shy, and house hunters who are just now joining the fray can expect to pay a bit more than over the last few months. 

All major metropolitan housing markets in the U.S. posted annual price gains in June, according to the benchmark Standard & Poor's/Case-Shiller index of 20 cities. Out of the 20 markets, 18 posted month-to-month price increases. When compared to June 2011, some housing markets posted significant annual growth. Such is the case with Phoenix and Miami.

The S&P/Case-Shiller report owes some of its positive numbers to seasonal activity among home buyers. Many American families take advantage of the summer to relocate just before the beginning of the new school year, but the level of real estate activity has picked up considerably since June 2011. The most active players in the housing markets have been investors, and the price increases are catching up to their contribution.

Prices May Stabilize as Investors Look for Opportunities

Real estate investors may be ready to take a break. In fact, some of the current listings may belong to investors. According to the National Association of Realtors (NAR), the current inventory is down almost 24 percent since last summer. This means that investors have been very busy scooping up the bargain deals presented by Real Estate Owned (REO) portfolios, foreclosures and short sales. 

Now that prices have been boosted by investor activity, they may be ready to take a break. Such is the case in California, a state that has seen periods of strong sales. Real estate investors have a certain tolerance when it comes to pricing, and they may be retreating to the sidelines due to the recent increases in pricing and mortgage interest rates. 

An Overall Favorable Climate for House Hunters

While investors wait for rock-bottom deals, home buyers can rejoice in the fact that median prices are still about a third of what they used to be at the height of the bubble in 2006. 

Investors are waiting on another round of foreclosure completions and more REO properties to join bank portfolios, but that may fail to materialize in the magnitude they expect. Mortgage interest rates have climbed a bit, but the Federal Reserve Bank has vowed to keep them at historical lows until the end of the year.


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