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Picking Up Speed: Prices for Investment Housing Are Accelerating

Loss Mitigation BHMedian sales prices for investment housing and owner-occupied housing has accelerated during the month of September, according to a recent report from HomeUnion [1], a real estate firm that provides all the services investors need to buy, sell and manage real estate online.

According to the monthly HomeUnion Home Sales Report, median prices increased 17 percent year-over-year to $269,300, making this the 55th month of year-over-year growth in the residential real estate sector since 2012.

The report notes that all-cash buyers pushed prices up nearly 33 percent in September to $211,400. And additionally, average cap rates for both financed and non-leveraged single-family rentals dropped 90 basis points all the way down to 5.2 percent.

It was also noted that median prices for rental properties in markets hit the hardest by the recession completely hit bottom in 2012, and HomeUnion reports that little inventory remains in the sub-$150,000 range across several metros nationwide.

“With a paucity of lower-priced inventory, SFR investors have started to target higher-priced assets,” says Steve Hovland, Director of Research for HomeUnion. “The elevated price of all-cash sales is indicative of investors’ uneasiness with lower-risk, dividend-yielding assets. More buyers are willing to lock in returns over the next five to seven years because they doubt the Fed’s forthcoming monetary policy will greatly benefit them. Investors are frustrated by sitting on cash, and each passing meeting with inaction from the Fed casts further doubt about how much fixed-income investments will improve over the short term. Therefore, the attractiveness of SFRs is getting amplified.”