(NAR) -- Investment home purchases represented nearly one-third of all existing-home sales last year, according to a National Association of Realtors® report on second homes released today. This robust investment activity underscores the importance of limiting the government’s use of real estate owned (REO) bulk sales, as NAR recommended in a letter sent to regulators this week.
The 2012 NAR Investment and Vacation Home Survey shows that investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010.
“Investors are already absorbing much of the nation’s housing inventory, and Realtors® are concerned that a bulk sale or rental program in areas where such a program is unnecessary could delay or impede local market recoveries,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Realtors® know their markets, and the demand is clearly out there.”
In its letter to the Federal Reserve Board, Federal Deposit Insurance Corp., Department of Housing and Urban Development, Federal Housing Finance Agency, Department of the Treasury, and Office of the Comptroller of the Currency, NAR urged policymakers and lenders to focus on expanding the availability of financing for qualified home buyers and investors to increase the REO absorption rate.
“More must be done to expand the availability of financing for qualified home buyers and investors to help draw down REO inventory rather than focusing on programs that could line the pockets of Wall Street companies and financial investment firms,” said Veissi. “NAR’s research shows that nearly half of investors last year – 49 percent – paid all cash, underscoring the tight credit issue.”
NAR also recommended that any REO bulk sales program be limited to small geographic areas where alternatives to individual investors are needed, and relying on the expertise of local businesses, nonprofit organizations, and local government for implementation.
NAR’s letter urged caution when evaluating the benefits of certain “mortgage-to-lease” programs, like the pilot program recently announced by Bank of America.
“As the leading advocate for homeownership and housing issues, NAR believes that any family who loses a home to foreclosure is one family too many. Realtors® believe pre-foreclosure efforts should be intensified to help reduce the number of properties that end up as REOs,” said Veissi. “We hope that efforts will remain focused on keeping families in their homes as homeowners, rather than on programs that consolidate hundreds or thousands of properties into rentals and require large financial institutions to act as landlords.”