Real estate investors, who have dominated segments of the housing market since the Great Recession began, may start to pull out this year, leaving the playing field a little more open for traditional home buyers, according to a new survey from housing data firm Zillow.com.
In the Zillow Home Price Expectations Survey, 110 economists and real estate experts predicted that investors are likely to make fewer purchases in 2014 as a result of rising prices.
“Buyers entering the market in the next few months will not be competing with cash-rich investors like they were last year, which should be some small solace given the higher prices and mortgage rates that they will encounter,” Zillow Chief Economist Stan Humphries said in a statement. He added, “Real estate investors, both large and small, played a crucial role in helping to stabilize markets during the darkest days of the housing recession, but a decline in investor activity now isn’t necessarily a bad thing, and could have real benefits for buyers,” Humphries said.
What does this mean for traditional home buyers this year? As investors gradually leave the market, there will be more available inventory. And those competing for the available homes will be more alike in their budgets – investors have often been able to pay cash, making them more attractive buyers to home sellers. Now most buyers will only be bringing a portion of the price to the mortgage table, perhaps keeping the home price increases within a more narrow range.
In fact, the surveyed experts believe that home prices will only appreciate 4.5 percent on a national average in 2014, far below the double-digit growth of the previous year. While this year’s price increases still outpace the historical average of around 3 percent, the slower pace could help more people finally get into the market.