A new report [1] from Realtor.com [2] shows that investors who initially acquired foreclosed homes in bulk post-housing crisis, have now begun to cash out or slow the rate of their acquisitions.
Examining the 50 largest metros in the U.S., Realtor.com investigated sales transaction data in order to better explain the national decline in investor activity.
“The metros can be grouped by several trends that characterize where investment activity stands in the region,” adds the report. “Of the top 50 metros, approximately 70 percent of them have seen the share of company purchases peak in 2012-2014 and decline since. This is the most expected pattern and coincides with the gradual increase in prices and decline in inventory which reduced choice investment opportunities.”
Despite this national trend of decline, Realtor.com reported that some metros deferred from the national trends, actually showing an uptick in investor activity.
“After a post-recession rise, the company share of purchases in some metros such as Baltimore, New York, Rochester, Buffalo, Dallas, Houston, and Indianapolis either never decreased or continued to rise,” says the report. “However, it should be noted that the company share of purchases in Buffalo, Rochester, Indianapolis, Houston and Dallas is relatively small, only 5 to 6 percent in 2016.”
Taking a look at the ratio of foreclosure sales in Baltimore, Realtor.com found that there was an increase from a post-recession low of 9.7 percent in 2012, to 18.1 percent in 2015. The report adds that this trend could be attractive to those investors looking for deals on properties they can lease out at market rents or hang on to in the hopes that price growth in the area will begin to reflect national trends.
Further the report found that, in New York and New Jersey, the ratio of foreclosure sales to total sales has grown starting in 2013. New Jersey’s share increased from a post-recession low of 4.0 percent in 2013 to 11.0 percent in 2016, and New York’s share of all purchases grew from 3.7 percent in 2013 to 7.3 percent in 2016.