CBS Money Watch | October 8, 2012 | Ilyce Glink
Across most of the country, home prices remain affordable and rents continue to rise. And while today's investors are helping the housing recovery, they're not completely responsible. Data from the National Association of Realtors (NAR) suggests that traditional repeat buyers are driving today's market.
According to a recent joint survey by BiggerPockets.com and Memphis Invest, 39 percent of investors plan to buy more properties over the next 12 months than they did over the last year. Twenty-six percent of investors plan to purchase the same number of properties.
"Though housing markets are changing across the nation, investors are still seeing great opportunities. Hundreds of thousands of foreclosures and short sales are coming to market and rents are continuing to improve in most markets, creating a positive environment for the nation's 2.81 million residential real estate investors," Joshua Dorkin, founder and CEO of BiggerPockets.com, said in a press release.
"They will certainly continue to be major player in the nation's housing economy for the foreseeable future," he added.
According to the survey, one out of eight -- or 28.1 million Americans -- either consider themselves to be residential real estate investors or own residential investment properties today, according to the survey. That high number is not surprising when you consider many homeowners are renting out properties they'd rather sell.
NAR data shows investors accounted for an average 22 percent of the market share from 2003 to 2011.
There are perks to investors taking an active interest in today's real estate market. With millions of Americans actively investing in real estate, billions of dollars are being poured into repairs. The results of the survey reveal that real estate investors are spending more than the Department of Housing and Urban Development (HUD) to rehabilitate neighborhoods.
Recent NAR data suggests that investors absorbing the over-supply of inventory helped stabilize the housing market. Residential real estate investors have spent more than four times the amount of money HUD's Neighborhood Stabilization Program has to repair foreclosed and short-sale homes, the BiggerPockets.com/Memphis Invest survey says.
At a median expenditure of $7,500 per property owned, investors are spending a total of $9.2 billion per year to repair the damage caused by foreclosures. By comparison, Congress has authorized a total of about $7 billion for the Neighborhood Stabilization Program over the past four years.
Chris Clothier, a partner with Memphis Invest, believes investors are improving neighborhoods and driving local economies. They are purchasing properties that would otherwise sit vacant for months, dragging down area home prices, and using local electricians, plumbers and labor to update the homes. "Those dollars provide jobs and put money into local economies. It's clear that investors are the ones who are risking their own money to improve and stabilize neighborhoods for new owners or tenants," Clothier said in a press release.
