Investors Drive Up Home Prices
Real estate investors are outbidding first-time buyers, paying up to 4.3% over market value, making it harder for them to compete.
Coupled with high mortgage rates and record-high home prices, data from Cotality, a real estate analytics firm, shows that investors are contributing to the challenge.
Impact on Home Prices
According to Thom Malone, Cotality's principal economist, investors pay more than market value for homes, with premiums ranging from 1.8% to 4.2%, depending on portfolio size.
- Premiums on a median-priced home of $405,000 can equate to an extra $7,300 to $17,415.
- These overbids often include all-cash transactions, waived contingencies, and faster closings.
“There are several reasons an investor might pay more than market value,” Malone wrote. “It can be a tactic to quickly close on a home, or it could be a speculative bet that the seller has underpriced a property. It could also simply be a lack of local knowledge.
Author's summary: Investors outbid first-time buyers, driving up home prices.