Investors are becoming cautious about appreciation in home prices in some markets and the possibility of lower affordability, according to a report by Bank of America Merrill Lynch.
While investors have helped to stabilize the housing market in the downturn, they now may start to back away from the market, which will leave opportunities for other home buyers to step in.
Investor demand has been shrinking as the number of distressed homes shrinks. Investors mostly targeted the hardest hit housing markets to take advantage of low home prices. Investor transactions make up the highest share of total transactions in Miami, according to first-quarter data from RadarLogic.
"This will be part of the transition back to a more normal housing market, but also another reason to expect slowing price appreciation in coming years," writes Chris Flanagan, Michelle Meyer and Justin Borst, mortgage-backed securities strategists for Bank of America Merrill Lynch. "The dynamics of investor buying and their subsequent sales will be important to monitor over the coming years.”
Source: “Changing market leaves investors cautious on housing,” HousingWire (June 26, 2013)
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