Rising Prices Put Real Estate Investors On Hold

Now that property values are increasing, real estate investors plan to buy fewer properties in the next 12 months, according to a survey of 3,020 adults conducted in May by ORC International for MemphisInvest.com and Premier Property Management Group.

What's more, investors plan to hold their rental properties longer – which makes sense considering that a separate study released Wednesday shows that 42% of renters in the U.S. don't think they'll be eligible for a mortgage for another five years.

They key finding of the survey is that investor purchasing intentions have changed. Back in August 2012, only 30% of investors said they planned to buy fewer properties in the next 12 months than they did in the previous year.

But as of May, the percentage of investors who said they plan to cut back on purchases in the coming year had risen to 48%. Only 20% said they plan to increase purchases – compared to 39% 10 months ago.

More than half of investors polled for the survey say they plan to keep their rental properties for another five years. And about a third say they plan to retain their rentals for another 10 years or more.

‘Higher prices are reducing returns on investment, and investors are responding by cutting back on their purchasing plans until conditions sort out,’ said Chris Clothier, partner in MemphisInvest.com and Premier Property Management Group. ‘Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good deals on distress sales.’

According to the National Association of Realtors, investors purchased 24% of all existing homes sold in 2012, a decline from 27% in 2011. The drop in purchasing intentions could result in a further decline in investor market share in 2013.


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