More Than Half of Investors Believe the Housing Market is Overvalued

Up from 40% a year ago, 55% of real estate investors feel that their local market is overvalued and expect to see a price correction in the coming months. 

According to Auction.com, an online distressed real estate marketplace, a March 2022 survey of confirmed buyers who used their platform in the last three years also found that 17% of buyers predict flat or declining home prices in their home market in 2022, up 12% year over year.  

“While most real estate investors on the frontlines of the housing market believe their local market is ripe for a correction, more than eight in 10 don’t think that correction will happen in 2022,” said Daren Blomquist, Vice President of Market Economics at Auction.com. “Most of our buyers are local community developers buying and renovating distressed homes that they will resell to retail buyers six to 12 months in the future. This strategy keeps them constantly vigilant about the future market conditions into which they will be reselling their renovated homes.” 

“Small investors are particularly active at these auctions, and they are sort of the single largest buying group,” said Laurie Goodman, Institute Fellow at the Urban Institute. “The thing that I thought was really, really interesting was that a lot of these mom-and-pop investors buy these properties with the intent to fix them up and flip to owner-occupants down the line.” 

Breaking down the data a bit more, 61% of respondents identified themselves as flippers, up from 57% a year earlier. A further 72% of respondents indicated that they believe their investments improve neighborhoods. 

“Auction.com buyers confirmed that along with performance, social responsibility is also a critical part of their business,” said Jason Allnutt, CEO of Auction.com. “For most of our local community developers, who dominate the Auction.com platform, that means reselling to owner-occupants and improving neighborhoods with quality renovations. For sellers, it means auction buyers are helping with better disposition outcomes by taking inventory and turning it into affordably priced housing.” 

Other high-level findings from the report: 

• 56% of respondents ranked online auctions or remote bid as top acquisition method 
• 92% spend more than $10,000 on renovations 
• 86% expect acquisitions to increase or remain the same in 2022