Institutional investors pushed up home values
A significant portion of the gains in home values over the last two years has been attributed to investors in the U.S. real estate market.
Across the 1,264 counties nationwide with data available to track institutional investor purchases - defined as purchases by investors who bought 10 or more residential properties - the median price of a home increased by 14 percent between 2011 and 2013, RealtyTrac reported. In these counties, institutional investors accounted for an average of 6.14 percent of all sales, or more than 850,000 homes.
Among the 88 counties in which institutional investors accounted for 10 percent or more of the residential purchases, which include about 12 percent of the population, the median home value increased by an average of 23 percent. In the 14 counties accounting for 1 percent of the population, in which institutional investors purchased 20 percent or more of the residential properties, home prices appreciated by an average of 31 percent.
Regarding the Houston real estate market, institutional investors accounted for 7.96 percent of the residential property purchases in Harris County and 9.7 percent in Brazoria County.
Warren Buffet is credited in the report as kicking off this investor activity, with a statement in a CNBC interview. Talking about purchasing single family homes, he said, "I would load up on them and I would — I would take mortgages out at very, very low rates."
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