Small scale real-estate investors are less enthusiastic about the state of the U.S. housing market — and their reasons for worry largely mirror those of the average home buyer today, according to a new survey.

Real-estate data company RealtyTrac reported that 48% of individual real-estate investors view the investment market as being worse or much worse than it was a year ago, based on the results of a survey the company conducted. That’s up from 45% of investors in last year’s edition of the same survey.

RealtyTrac polled mom-and-pop investors who purchase between one to 10 properties a year — including both investors who flip the homes and those who hold onto them as rental units. These investors own most of the single-family rental properties in the country.

Notably, RealtyTrac found that a smaller share of investors in this edition of the survey planned to flip the homes. That aligns with previous research from RealtyTrac’s parent company, Attom Data Solutions, that found that the frequency of home-flipping was down compared to historical levels as profit margins remained depressed.

As for the top concerns among real-estate investors, the most-cited response was the rising cost of homes, which 63% of respondent listed as a major challenge. Next was the lack of available inventory, which was cited by 57% of investors.

“Nearly two-thirds of real-estate investors view the rising cost of homes as a major challenge.”

Other major worries included the cost of materials and labor for home building and improvement projects, as well as competition from traditional home buyers.

“It’s no wonder that individual investors believe that the market is less favorable today than it was a year ago,” Rick Sharga, executive vice president at RealtyTrac, said in the report.

Another issue that could be factoring into investors’ views on the state of the U.S. housing market is the situation with foreclosures. The availability of mortgage forbearance and an ongoing moratorium on foreclosures at the federal level has meant that foreclosure activity was down some 70% in August versus the same time period in 2019. According to RealtyTrac, the number of homes in foreclosure is at the lowest level on record.

Because of the appreciation in home prices, many people who are in forbearance and behind on mortgage payments may be able to sell their homes rather than go into default. Investors remain divided as to whether they believe that foreclosure activity will return to normal in the future or surpass typical levels, the survey found.

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