With U.S. residential real estate prices at today’s levels, from a pure investment standpoint, some potential home buyers might assume that a downturn in values might be more likely than not. That feeling would hardly be improved by the onslaught of troubling international headlines, inconsistent medical guidance, and any number of other unresolved public issues. You could hardly fault some qualified buyers for hesitating before making a major decision like buying a home—even when attractive mortgage interest rates continue to put desirable properties into their affordability range.
The details in last month’s Mansion Global Market Report might ease at least some of those worries. It documents recent activity among the most sophisticated investors—good company for regular consumers who don’t dedicate their full-time attention to ferreting the best investment opportunities. It seems that professional investors are actively buying residential real estate at an increasing pace. The report’s headline made that point indisputable: “Investors Account for About One in Six U.S. Home Sales.”
The MG reportage is a product of the Barron’s Group—with Barron’s being a stalwart publication aimed at professional investors. By documenting the announced investment filings by institutions and businesses that buy residential real estate, they were able to report that the 68,000 properties they bought in the second quarter constituted more than a 15% increase over those purchases in the previous quarter. That’s the highest quarterly figure recorded since 2000 (and 2000 was when Barron’s first started tracking sales volumes). That rate also more than doubled last year’s second-quarter total.
One senior economist tackled the hefty price issue directly. “Investors see soaring home prices as an opportunity,” said senior economist Sheharyar Bokhari. From his point of view, “returns are pretty much guaranteed—especially when you’re an investor who has access to extremely cheap debt.”