Investors Drive Up Home Prices
Real estate investors are outbidding first-time buyers, paying up to 4.3% over market value, making it challenging for them to compete.
Coupled with high mortgage rates and record-high home prices, investors are making it harder for first-time buyers, according to data from Cotality, a real estate analytics firm.
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 be 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 homebuyers, driving up prices.
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