Newspaper article International New York Times

Investors Pushing Up Home Prices

Newspaper article International New York Times

Investors Pushing Up Home Prices

Article excerpt

There is a strong relationship between overall price levels and institutional involvement.

Wall Street is driving up home prices in the United States again, but this time it is not through granting mortgages to customers who cannot afford the houses. Instead, it is institutional investors who have been buying up relatively inexpensive homes, particularly in areas hard hit by foreclosures during and after the Great Recession.

In the Atlanta area, prices of the least expensive homes have more than doubled since March 2012, when home prices across America hit bottom, according to the Standard & Poor's/Case-Shiller indexes of home prices.

That is by far the best performance for relatively inexpensive homes in any of the 16 markets in which the S.&P./Case-Shiller indexes break out performance by thirds of the market.

Atlanta is also the market where institutional investors have been most active, accounting for 14 percent of the homes purchased there during the most recent eight quarters, according to figures compiled by RealtyTrac. Those investors purchase homes to rent out to others.

"Local investors have been telling us for some time that the institutional investors are pushing up prices, particularly at the foreclosure auctions, beyond what the local investor is willing to pay," said Daren Blomquist, a RealtyTrac vice president.

"When we look at our data, it's clear that the home price recovery has been largely driven by investors and other cash buyers," he added. "As those investors and cash buyers slow down their purchases, the big question becomes, 'Will demand from owner- occupant buyers be enough to keep the sales and prices moving higher?"'

The accompanying charts show the trends in the 16 markets for lower-priced homes -- the bottom third of the market -- and for more expensive homes -- the top third of the market. …

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