Joe Naccarato's Real Estate News You Can Use: Investors to Dominate Market for Next 2 Years

Investors are expected to outnumber traditional home buyers three to one in the next two years, according to a national survey by Move Inc.

These investors also are ready to compete with traditional first-time home buyers to snag the best deals. About two-thirds of investors say they expect the problems that first-time buyers are having with financing and getting mortgages will work in their favor in competing for properties. One in five investors say they plan to purchase properties using cash-only and 80.5 percent expect cash discounts on properties from sellers.

Some additional findings from the Move Investor survey about this growing segment of home buyers are:

--43.5 percent of investors expect it to get more difficult to find housing bargains in the coming months. Twenty-two percent expect prices to rise in the next six to 12 months, while 53 percent expect prices to stay relatively flat.

--Half of the real estate investors surveyed say they plan to hold their properties for five years or more. Only 11 percent expect to sell within 12 months of buying it.

--Nearly half of the investors surveyed expect a profit of 20 percent or more from their investment, 40 percent expect a profit of 10 percent, and 6.5 percent expect a 5 percent or less return on investment.

--Nearly half of investors say they plan to live in their investment property until it's sold or turned into a rental property.

--About 56 percent of investors plan to turn their investments into rental properties. Also, the survey found that 28 percent plan to purchase a vacation property and 30 percent reported an interest in buying retirement property as an investment.

--Nearly 60 percent of investors say they're new to real estate investing. About 33 percent are considering their first investment purchase and 8.5 percent are in the process of buying and selling their first investment property. Of those surveyed, only 36.5 percent had experience in more than one property transaction.

"This data suggests today's climate is hot for investing and is attracting a lot of new people that don't fit the stereotypical deal-driven flippers that buy and sell properties quickly," says Steve Berkowitz, Move Inc. chief executive officer. "They're mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities."

Source: “New Survey Shows Local Real Estate Markets Heat Up With Investors,” Move.com (May 26, 2011)