Investors vs First-Time Homebuyers In Today’s Market
Each year since 2003, the National Association of REALTORS® has organized a report entitled The Investment and Vacation Home Buyers Report, based on a survey of those who bought a residential property including a primary residence, investment home, or vacation retreat. The 2015 results are in, and there are several surprising facts.
National Trends In 2015
2015 saw a substantial increase in competition between property investors and first-time homebuyers. According to the report, investors are beginning to search for smaller, more affordable properties in both urban and suburban areas, often outbidding first-time homebuyers. How?
Cash & Favorable Financing Terms
Investors normally have a higher income with more disposable cash flow, which means they are more willing to buy a home outright with cash instead of apply for a mortgage. This makes them more appealing to sellers because they can close quickly and there are less hurdles to jump through to get the sale closed.
Additionally, when investors do obtain a mortgage, investors are able to make a higher down payment, often in excess of the 20% norm, meaning their loan is more likely to get approved. Investors have a lower debt-to-income ratio as well as higher credit scores, making them the total package, as well. Most first-time homebuyers can’t compete with qualifications like that.
More Investors = More Competition For Entry Level Homes
Most investors buy homes to use as rental properties, and with the traditionally low interest rates we’ve been seeing these past...