Investor Activity Falls Sharply in May

Investor Activity Falls Sharply in May

06/24/2013 BY: ESTHER CHO

As prices rise, investors are having a harder time justifying housing market purchases, according to a recent Campbell/Inside Mortgage Finance HousingPulse Tracking survey.

In May, the share of home purchases from investors fell to the lowest level in more than three years, dropping to 20.2 percent from 22 percent in April, according to the survey.

Previously, investors were drawn to damaged REOs and short sales due to the discounts that were generally offered and for the opportunities to flip or rent out the properties.

Though, HousePulse survey respondents explained investor incentives have weakened as profit margins dwindled due to rising prices.

Real estate agents who responded to the HousingPulsesurvey also said small investors are selling off their inventory of rental properties.

Although investor interest has waned, both current homeowners and first-time homebuyers have ramped up activity over the last two months. In May, current homeowners represented 43.8 percent of home purchases, while first-time homebuyers accounted for 36 percent of purchases, according to the survey, which includes responses from about 2,000 real estate agents nationwide each month.

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