ATLANTA -- Would-be home buyers who are frustrated by rising home prices and low inventory may have to wait a few years for relief, real estate experts told a conference on Wednesday.
Institutional investors, who have been driving the market with their all-cash purchases and buying houses for rental income, need to be in and out in two to three years, Bill Rayburn, chair of mortgage technology company FNC, told a gathering of the National Assn. of Real Estate Editors.
“Otherwise they can’t make their numbers to get their 20 percent upside,” he said during a panel talk titled “Home Price Progression: What’s Next?”
For housing to normalize, individuals will need to come back to the marketplace, he added, and that will be driven by employment.
Among the signs that investors are buying up swaths of homes in a specific area are the lack of bank-owned properties coming on the market despite high foreclosure rates, said Tom O’Grady of Pro Teck Valuation, a residential real estate valuation provider. This has been happening in parts of the nation where rental markets are strong and values suffered in the downturn, such as Phoenix.
“It became cheaper to buy a home than to build it,” O’Grady said. In such markets, housing inventory has dropped from 24 months to two months. “It is a short-term phenomenon,” he said. “At some point these deals are going to evaporate.”
Consumer understanding has been a step behind what’s happening in the housing market, added Michael Byrd, president of the National Assn. of Exclusive Buyers Agents.
“When the prices started going down, sellers were the last ones that got the memo,” Byrd said. Today’s buyers may have to be willing to look in different locations, while prices continue to appreciate.
Byrd, who is based in San Luis Obispo, voiced optimism about the direction of housing. “I don’t think we are going to see this thing pop,” he said.