“(MoneyWatch) Home prices are up, the number of properties on the market is down and buyers are moving fast to take advantage of deflated prices. So is the housing market finally returning to normal?
Not exactly. Many of those real estate buyers aren’t your everyday bargain-hunters. They’re Wall Street and international investors. While the fast money is boosting the housing market, it also poses risks in a key sector of the economy that is just getting back on its feet.
Data show that investment trusts, private equity firms and other institutional investors are purchasing thousands of single-family homes. The idea is to fix them up, rent them out and, when prices rise, sell them.
Although it’s not the first time that financial firms have scooped up blocks of homes in anticipation of a rebound, it’s hard to predict how this will affect the neighborhoods where firms are doing most of the buying. In the past, most single-family homes were built to order, purchased by the family that would live in them for years.
So what happens to the housing market when investors are doing the buying rather than owner occupants? And what happens to the neighborhoods in which this is occurring?
It’s tough to pinpoint exactly how many homes are being purchased by investors rather than individual buyers. One of the best ways to do that is to look at absentee purchases, where the property tax bill is sent to a different address. These typically indicate an investor-purchased property, but there could be second-home buyers in the mix, particularly in popular vacation-home markets….”
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