|From KCM BlogHome Sales: Investors Are About to Return
Posted: 20 Sep 2011 04:00 AM PDT
Sales in the housing industry have remained stagnant over the last several months. Though certain categories of purchasers have remained stable and even increased, the number ofcash buyers and investors has dramatically decreased. Researchers from Capital Economics recently reported:
However, we believe these purchasers have not left the market entirely but instead have been waiting on the sidelines.
Both cash buyers and investors are normally looking for a deal/steal on the real estate they purchase. It is our opinion they are waiting for the release of the glut of distressed properties which has been kept off the market while paperwork issues were being cleared. Proof of this can be seen in the decreasing percentage of overall sales the distressed market has represented over the last six months (40% to 29%).
As we posted yesterday, this distressed inventory is about to come to market. These foreclosures will have very enticing prices on them. We believe sales will jump.
The supply of houses will increase; so will demand for this inventory. The impact on prices will be determined by which increases more. Our bet is that supply will still be greater than demand causing further downward pressure on overall prices.