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Survey Shows Investors Returning to Real Estate

By Michele Lerner

The Move.com Homeownership Survey released November 11 revealed some interesting statistics on how falling home prices and the perception of a stabilizing real estate market are encouraging investors to come back into the market. One out of every eight buyers surveyed (12.1%) plan to purchase a home as an investment property, which is more than double the amount (5.6%) of investors in the March 2009 survey.

Foreclosure Buyers

A major source of potential investment activity is in the foreclosure market, where 25.3% of consumers hope to buy a home. Forty-two percent (42%) of foreclosure buyers are interested in purchasing one for an investment, with 57.6% of buyers planning to occupy the foreclosure. Investors buying foreclosures are split in how they intend to use the property: 13.2% intend to convert the property into a rental home, 11.3% will fix the homes for resale and 17.4% will have a family member live in the home until the market improves and the home can be sold at a profit.

Profits Anticipated

Most foreclosure buyers (58.2%) expect to pay 20% or lower than the market price, and 38.5% expect a 25% or greater discount. Discounted prices are part of the optimism that foreclosure buyers have for appreciation, with 73% expecting their properties to appreciate 10% or more in five years and 28% expecting their purchase to appreciate 20% or more in five years.
The Move.com survey says that the Federal Housing Finance Administration’s Purchase Index says that homes have appreciated an average of 15% nationally since 2004.

Motivations

Both investors and homebuyers are currently buying homes because of low prices, high inventory and the concern that prices and interest rates may rise. Among buyers and investors, 23.6% are concerned that prices are as low as they will go and 18.7% want to take advantage of foreclosure bargains. Another 21.2% want to take advantage of the selection of homes in their community and 14.2% are worried about interest rates rising.

Foreclosure Fears Ease

While rising unemployment may increase the number of foreclosures in the next 12 months, the Move.com survey shows that fewer people are worried that they or someone they know will suffer a foreclosure. In March 2009, 52.5% of the survey respondents said they were concerned about personally facing foreclosure or having someone they know lost their home. In October 2009, that number dropped a little to 45.1%. The perception is that the housing market may be stabilizing.
For complete survey results, visit www.Move.com


Michele Lerner, a real estate expert and freelance writer with 20 years of experience, is the author of “HOMEBUYING: Tough Times, First Time, Any Time”.

 

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