There has been a general consensus that investment in US property grew strongly last year, and now we have hard data backing it up. According to a newly released report from the National Association of Realtors 1.23 million US homes were purchased as investments by Americans in 2011, a 65% increase on 2010. With this investment purchases accounted for 27% of all purchases in the US, up from 17% in 2010. The report also shows that 49% of investors bought in cash, and 41% bought more than one property.
"During the past year investors have been swooping into the market to take advantage of bargain home prices," NAR Chief Economist Lawrence Yun said in the report announcement. "Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period."
According to the report the average price paid for an investment property was $100,000, up from $94,000 in 2010. This growth could be interpreted as tying in with the theory that the US housing market bottomed in 2011, despite the fact that it is still well below the $184,500 average investors were paying at the beginning of the boom in 2005.
That said: the report also shows that first time buyers accounted for only 37% of buyers in 2011, down from 50% in 2010 and also that the average age to buy increased to 45 from 39, both signs of the continued problem faced by the housing market, namely the lack of credit for young first time buyers. The report also shows that the average loan to value on homes purchased with a mortgage was 89%. This is more than many first time buyers can afford.
The NAR hasn't released data on international buyers purchasing in America in 2011 as yet, but when it does it will make for some interesting comparisons.
- Monday 02 April 2012