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LOS ANGELES, CA – July 25, 2013 – (RealEstateRama) — Investors have played a key role in the California housing market recovery for the past four years. Low mortgage rates, attractive home prices, and low yields on alternative assets have fueled demand for investment properties, particularly where distressed homes have dominated sales.
In keeping with common wisdom that today’s real estate market is ideal for a long-term investment strategy, two-thirds (66 percent) of investors who worked with a REALTOR® indicated they are going to keep the property for more than a year, while about one-fourth (26 percent) of investors intend to flip the property within a year, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ “2013 Investor Survey.”
Additionally, three-fourths of investors are of the small mom-and-pop type, owning 1-10 other investment properties, with 15 percent owning just one property, 46 percent owning 2-5 properties, and 14 percent owning 6-10 properties, the investor survey found.
Of the properties purchased by investors, single-family homes were the preferred property type, with 78 percent of transactions involving single-family homes. Multifamily properties comprised 14 percent, 7 percent were other property types, and bulk sales made up only 1 percent.
The median sales price of an investment property was $272,500. More than eight out of every 10 investors made repairs to their investment properties, spending a median of $10,000 – or 4 percent of the median sales price. Investors spent a greater percentage (4.2 percent) of the sales price rehabilitating properties costing $250,000 or less than they did on properties costing $500,000 or more (3.4 percent).
Among the reasons investors bought or sold now include profit potential (34 percent), good price (26 percent), low interest rates (10 percent), personal reasons (6 percent), and location (4 percent).
Additional findings from C.A.R.’s “2013 Investor Survey” include:
• More than two-thirds (67 percent) of investor buyers paid cash.
• Twenty-seven percent of investors were foreign investors, with China, India, and Mexico being the top countries of origin.
• The majority of investors (59 percent) found their property on the MLS.
• Three-fourths of buyers intend to keep the property for less than six years.
• More than two-thirds of the properties are managed by the owners, rather than professionally managed.
• The median rate of return on investment was 14 percent.
California Investor Survey Slides:
• Investors favor long-term investment strategy
• Top five reasons for buying/selling
• Number of properties owned
• Investors’ country of origin
C.A.R.’s “2013 California Investor Survey” was conducted in April 2013 in an effort to learn more about the role of investors in the California housing market. The survey was emailed to a random sample of REALTORS® throughout California who had worked with investors within the 12 months prior to April 2013. For the full survey report, visit www.car.org/MarketData.
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
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