Price increases in many once “hot”
investment markets are prompting real estate investors to shift their
focus elsewhere as they seek to buy up more distressed homes to turn
into money-making rentals.
For example, Phoenix was largely targeted by investors, but it has
recently seen large home price gains, up 24 percent year-over-year in
November, which has caused many investors to start to move on to other
markets. In August, the percentage of homes purchased by investors in
Phoenix was nearly 36 percent but by November that percentage fell to 38
percent.
"The Phoenix-like phenomenon has migrated to other markets," says Sam Khater, CoreLogic economist, told USA Today.
Investors are changing their focus to Southeastern cities like Atlanta and Tampa, Fla., USA Today reports.
Investors are expected to stay a powerful force in real estate in
2013. According to JPMorgan Chase research, institutional investors have
$10 billion to spend on the single-family rental market this year.
Investors reportedly are mostly targeting distressed homes in cities
that saw the biggest hits to home prices from the 2006 downturn. The
properties they most tend to seek: Three bedrooms, two baths in the
$100,000 to $125,000 range.
They plan to then rent these homes out for $1,000 a month, housing analysts say.
Source: USA Today (Jan. 21, 2013)