Thursday, September 19, 2013

Charlotte is second-hottest housing market for institutional investors

The Charlotte metropolitan area is the second-hottest market in the U.S. for rental-home purchases by institutional investors, according to a report released Thursday.

Irvine, Calif.-based RealtyTrac, which studied 9,583 Charlotte-area home sales from May to July, said 20 percent of the properties were bought by institutional investors, defined as someone who has purchased at least 10 residential properties in a 12-month period.

The No. 1 market was Atlanta, where 24 percent of the properties went to institutional investors.

Institutional investors have been flocking to the Charlotte area in recent months.

The Observer reported in July on the trend of Wall Street-backed investment groups snapping up homes in middle-class neighborhoods across the city to turn them into rentals. Private equity giant Blackstone has been among the buyers. In general, investors are buying homes in the Charlotte area for between $100,000 and $200,000 -- in cash deals.

In a press release Thursday, RealtyTrac's chief economist, Jake Adger, said institutional investors can drive up home prices and lead to a scarcity of listings. Last week, the Charlotte Regional Realtor Association reported that the average sales price of existing homes sold in August was $237,635, an increase of 11.1 percent from August 2012 and the largest year-over-year gain so far in 2013.

The supply of existing, for-sale homes has remained tight in Charlotte. There was 5.4 months of inventory in August, down from 7.6 months a year ago.

Three Charlotte-area counties made RealtyTrac's list of the "Top 25 Investor-Saturated Single-Family Rental Markets" released Thursday. Those are defined as markets where there were 500 or more sales to institutional investors from May to July.

In Cabarrus and Mecklenburg counties, 25 percent of the homes sold during that period went to institutional investors. In Gaston County, 17 percent were bought by the investors.