Investors Take a More Cautious Approach
Investors are growing cautious over rapid home price appreciation in some markets and the potential for lower affordability, according to a report by Bank of America Merrill Lynch.
While investors have been credited with helping to stabilize the housing market when it was down, they may start to retreat from the market, leaving 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.”