Institutional Investors' Effect on Home Price Appreciation

Even though they stated in a newsrnrelease two weeks ago that institutional investment was waning, RealtyTrac hasrnreleased a report on its impact on the housing market.  Institutional investors are defined as thosernwho have purchased ten or more residential properties in a calendar year and inrnJanuary they accounted for 5.2 percent of home purchases, down from 8.2 percentrnone year earlier. In all of 2013 institutional investors purchased 354,000rnproperties or 7.40 percent and over the last three years their purchases haverntotaled 850,000 units. The January number was a 22 month low.</p

In a select set of markets,rnpurchases made by institutional investors represent more than 20 percent of allrnresidential sales over the past three years and they remain a significant force in arnnumber of areas, accounting, for a quarter of the market for example in Jacksonville,rnFlorida and Atlanta.  RealtyTrac’s newrnreport contends that in areas where institutional investors played arnsignificant role there was also a significant impact on home prices.  The same, however was not true of rents wherernthe effect was slight but in the opposite direction.   </p

RealtyTracrnlooked at 1,264 counties nationwide with sufficient data available to evaluaterninstitutional investor purchases or lack thereof and constructed the heat map</bbelow showing where these investors have been most active.  Hoverrnover any county to see the percent of residential sales going to institutionalrninvestors over the past three years, along with home price appreciation and thernchange in fair market rents for a three bedroom home during the same timernperiod.</p<p</p