According to recent data, investors are becoming an increasingly important part of real estate’s recovery. But is that a good thing? This month’s Power Broker Roundtable, brought to you by the National Association of REALTORS®, explores the issue with a few of the industry’s savviest brokers.
Moderator:
Rei Mesa, Special Liaison for Large Group Relations, NAR
Participants:
Tom Skiffington, Broker/Co-owner, RE/MAX 440 and RE/MAX Central, Perkasie, Pa.
June Slusser, President, Coldwell Banker High Country Realty, Murphy, N.C.
Scott MacDonald, President, RE/MAX Gateway, Chantilly, Va.
Rei Mesa: Investors are as much a part of real estate as title searches and open houses. But we all know investors come in two flavors: the “flippers” looking for a quick return and the “landlords” or long-term investors. Today’s investors, in general, if the data are correct, seem to be buying for the long term. So where do investors—and renters for that matter—fit in today’s market? Tom, what are you thinking? Are investors and renters friends or foes?
Tom Skiffington: I don’t believe there is any question investors are friends of this market—primarily because they are buying now for the long term. In our area, investors are scooping up property—especially at the low end—but with very patient money. They are rehabbing those properties for what they realize will likely be long-term rentals. That’s eliminating a lot of excess inventory.
June Slusser: In the resort and second-home markets, like the areas we serve in the mountains of Georgia and North Carolina, home prices bottomed out about 18 months ago. Investors today are buying desirable properties at fabulous prices for their own use or as income property—or sometimes as a combination of both. Our homes are moving very briskly.
Scott MacDonald: In our region, we’re down to something like a 2.8 month supply of inventory—and a 1.6 month supply of rentals. The lending picture is still a nightmare, but buyers with cash or good credit are getting some of the best deals of the decade.
JS: Attracting investors is one of the major reasons we subscribe to a program whose sole purpose is to educate people about the art of investing in real estate. I think it helps companies prepare their agents to market properly to investors.
RM: No question, a savvy investor has to be able to read the market, which is why so many investors today are prepared to buy and hold. What does that do for our communities?
TS: It’s all good. There are a lot of folks out there who’ve either lost their homes or, for a variety of reasons, are just not ready or able to buy. As renters, they are absorbing inventory that might otherwise be languishing on the market. Maybe we all ought to be sharpening our skills in marketing to long-term investors.
SM: Buyers are out there, investors or not. We’re seeing cash deals and multiple offers—we had three offers recently on one home that had only been on the market three days.
TS: What matters most is that conditions are right for buying and selling homes, albeit at the low end of the market, which is where recovery has to start. And that helps every community.
SM: We’re looking for inventories to shrink and prices to stabilize. Investors are helping that to happen—and, of course, it is in everybody’s interest to move homes while conditions are still optimal.
RM: The good news is that, according to statistics from the 2010 NAR Profile of Home Buyers and Sellers, 78 percent of recent homebuyers—ordinary, average, everyday homebuyers—say they see their home as a solid, long-term investment. Forty-five percent believe it’s better than stocks. So maybe it’s time to stop debating and get out there and do what we do best: connect buyers with sellers—no matter where or why they want to buy.
