When I saw today’s Mortgage Bankers Association survey of purchase applications fall again, I realized we’re in a period where investors can rule the home buying market.
If you’ve considered the purchase of a quality investment property in the first half of the year, you probably noticed that you literally couldn’t find quality housing. Primary occupants armed with tax credits snatched up everything in site near median home prices. We saw nearly our entire inventory purchased by these individuals. Unfortunately distressed inventory saw little competition during this same period as there is certain difficulty in using improvement financing for average home buyers.
The bottom end of the market (much of the inferior housing stock) saw little to no competition from the average home buyer because, frankly they don’t want it.
Mortgage purchase applications fell 3.1% last week (week-over-week basis) showing us a low not seen before since 1996.
What this means is that it’s now possible, to acquire these properties with limited competition from primary occupants. I said, “limited” because we are still getting heavy interest from owner occupants on Investor Nation housing stock, looking for non-distressed homes in pristine condition.
I know at least one investor who experienced frustration on finding his ideal investment property (near median-price value) because he was competing with tax credit buyers. He recently was able to find what he was looking for almost immediately after the April 30th contract deadline.
If it’s been easy to find the properties you are buying all along, you need to ask if there really is value in the asset. Aren’t things worth having, difficult to get?
- Ryan Hinricher, Founder & Senior Housing Analyst
