Tags: housing | rent | investors | inventory

Housing Market Still Ratcheting Higher

By    |   Friday, 12 April 2013 07:53 AM

Big institutional investors helped fuel the housing recovery by buying and then renting distressed properties, but now they may be exiting the market, according to Fortune.

And the departure of big money may be, in fact, favorable for the health of the housing market.

There is evidence the professional investor “frenzy” to buy underpriced homes for rental purposes may now have peaked, according to Fortune.

Editor's Note:
 
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

Rents for single-family homes rose just 0.1 percent in March. In some bellwether markets, like Los Angeles, Orange County, Calif., and Las Vegas, rents are actually falling a bit.

“The change suggests good news,” Fortune stated. “It hints that the broader housing market is normalizing, as the role of big investors in the recovery wanes. They bought so many properties that the supply of single-family homes for rent has met demand.”

If investors now start selling their rental homes to meet buyer demand, it could help ease the tightening supply of homes for sale nationally, Jed Kolko, an economist for real estate listing website Trulia, told Fortune.

Real estate site Movoto offered further encouragement in its monthly housing report for March.

Movoto estimated the total inventory of houses for sale declined about 21 percent year-over-year in 38 major cities, while the list price per square foot increased by 11.5 percent in the same period.

In particular, Movoto found some California markets leveled by the downturn in home demand are rapidly recovering, with a huge 80 percent decline in Oakland’s inventory and a 70 percent decline in Sacramento inventory.

In contrast to the home rental market, Movoto said a developing scarcity of homes for sale is creating challenges for would-be buyers even if the lack of supply helps increase values.

Movoto points out that the number of homes for sale on the market has plummeted dramatically, down 51.5 percent from 2011 and down 35.4 percent from 2010.

In a recent speech, William Dudley, president of the Federal Reserve Bank of New York, said government regulators still need to push banks and other lenders into extending more credit for housing and other consumer activities.

Dudley complained that stringent underwriting standards by banks are an overreaction to the recent financial crisis and are slowing the credit expansion and thus the economic recovery, according to American Banker.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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Big institutional investors helped fuel the housing recovery by buying and then renting distressed properties, but now they may be exiting the market, according to Fortune.
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2013-53-12
Friday, 12 April 2013 07:53 AM
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