Investors are less optimistic about the US housing market

• Small-scale investors are less enthusiastic about the US real estate market.
• The investment market is worse or much worse than a year ago, according to survey results.
• Two-thirds of real estate investors see rising housing costs as a big challenge.

Small-scale real estate investors are less enthusiastic about the state of the US housing market, and their concerns largely mirror those of the US real estate market home buyers, according to a new survey, reports today the specialized site Market Watch.

“Real estate data company RealtyTrac reported that 48% of individual real estate investors see the investment market as worse or much worse than a year ago, based on the results of a survey the company conducted. That represents an increase of 45% compared to last year’s edition of the same survey,” says the aforementioned site.

New concerns

Market Watch also says that RealtyTrac surveyed family investors who buy between one and 10 properties a year, including investors who invest the houses and those who keep them as rental units. «These investors own the majority of the single-family rental properties in the country,» he said.

In particular, RealtyTrac found that a smaller proportion of investors in this edition of the survey planned to switch houses. That lines up with earlier research from RealtyTrac’s parent company Attom Data Solutions that found house-moving frequency dropped compared to historical levels as profit margins remained low.

House prices

As for the top concerns among real estate investors, the most cited response was the rising cost of homes, which 63% of respondents rated as a major challenge. Then it was the lack of available inventory, which was cited by 57% of investors.

Almost two-thirds of real estate investors see rising housing costs as a huge challenge. Other major concerns included the cost of materials and labor for home construction and improvement projects, as well as competition from traditional home buyers.

The market at its worst

«It’s no wonder individual investors believe the market is less favorable today than it was a year ago,» Rick Sharga, executive vice president of RealtyTrac, said in the report. Another issue that could influence investor views on the state of the US housing market is the foreclosure situation.

The availability of mortgage forbearance and a moratorium in progress on foreclosures at the federal level has meant that foreclosure activity was down 70% in August compared to the same period in 2019.

Figures that alarm

According to RealtyTrac, the number of homes in foreclosure is at the lowest level on record.

Due to appreciating home prices, many people who are in forbearance and behind on their mortgage payments are able to sell their homes instead of being delinquent. Investors remain divided on whether they believe foreclosure activity will return to normal in the future or exceed typical levels, according to the survey.

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