Investors drive the housing market

When it comes to housing, investors are real deal.

A record 521 homes were purchased in metro Denver during the third quarter of last year, according to a RealtyTrac report that looked at 11 large US metro areas.

Of those homes, 46% were purchased by investors. That’s the highest share in five years.

Investors buying 1,600 homes sold in other US metro areas between July and September last year. RealtyTrac notes that this figure represented 20% of the total number of homes purchased.

Investors often buy in newly developed subdivisions or in existing homes with no apparent improvements. These home improvements can add value to investors’ properties because they become investment properties.

At the same time, apartment occupancy remains high, which means home prices won’t fall much in the region’s suburbs, where the bulk of the properties are bought and sold.

Only when the gap between home prices and average household incomes in areas with limited supply hits its lowest will affordability limit demand. Right now, there are not many places available to buy homes where median household incomes are below $150,000.

If buying an existing home becomes too costly and home prices continue to rise, investors may switch to investing in properties or rental properties rather than building new homes.

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