New Western [1] has released a study on single-family real estate investor sentiment and first-time home buyers' perception of the housing market, which found that 53% of residential real estate investors polled expect business growth in 2024, while 55% of consumers feel that local investors can help solve the housing shortage.
"As we enter the new year with continued low inventory, local investors are providing solutions to the shortage by fixing up unlivable homes and putting them back on the market, giving consumers more options for their home buying search," said Kurt Carlton, Co-Founder and President of New Western [2]. "Investors are fueled by the opportunity to capitalize while delivering much needed residential properties back to the market."
Key highlights of New Western’s findings include:
- Seventy-nine percent of consumers who have considered purchasing a home in the past 12 months have not yet bought one making 2024 a ripe year for home purchases. The biggest barriers cited as barriers included mortgage rates and finding the right home. Further, 30% of consumers who have considered purchasing a house in the past 12 months are first-time home buyers.
- A little more than 50% of those who have not purchased a home yet are worried about finding a home in the next year, though they remain optimistic.
- Forty-eight percent of those interested in purchasing a home are Millennials, a group that tend to be married and living in suburban areas with 53% of them having children under 18.
Investors are currently motivated first by profit potential, but are also eager to diversify their investment portfolio and provide housing options that are more affordable to home buyers. Further, location/neighborhood consistently remains the most important factor for investors' buyers outperforming interior design, outdoor space and home square footage.
From the first half of 2023 to the second half, New Western saw growth nationwide, with local markets Houston, Texas; Raleigh, North Carolina; Atlanta; Denver; and Austin, Texas leading the increase in investor-purchased homes. Additionally, New Western saw a 16% rise in investor purchases in the West, and 6.5% in the South during the same time frame.
"Homebuyers remain optimistic that housing inventory will become available in 2024,” said Robert Dietz, Chief Economist and SVP for Economics and Housing Policy for NAHB [3]. “With data pointing to improving conditions for home construction in the coming months, paired with a rise in local investor activity, we should begin to see the gap shrinking between supply and demand. Further, NAHB is forecasting approximately a 5% increase for single-family starts in 2024 as financial conditions ease with improving inflation data in the months ahead.”
The survey and report, titled "The Flip Side: Residential Real Estate Investing Trends for 2024," is an analysis from insight based on opinion polling from October to November 2023 from more than 1,280 real estate investors ages 18+ who have previously purchased property through New Western or plan to in the future and an external survey in the same time period among consumers who are looking for a new home from Gutcheck, a global market research company, as well as New Western market sales data. The external survey includes more than 820 participants ages 18+ who must have considered purchasing a house in the last 12 months or who have purchased one.
"The Fed's stated goal of 'higher for longer' interest rates will keep supply muted relative to history, but we've already passed the point of peak 'lock-in' effect, and we suspect that more buyers and sellers will let go of the hope for significantly lower rates as time goes on,” said Rick Palacios Jr., Head of Research at John Burns Real Estate Consulting [4]. “Flippers will continue to be a particularly important source of housing supply in markets where new home construction is limited and current homeowners cling to their low mortgage rates as long as possible.”