American Real Estate Investing Statistics and Trends
Investor Impact on Housing Market
The housing crisis created an impact of $9.2 Billion dollars lost to over 28 Million U.S. Real Estate homeowners.
America’s Housing Crisis
The housing crisis caused a downslide of negative effects for homeowners.
• Homes suffered decimated equity leading to 4 Million+ foreclosures.
• Rising inventories resulted in falling prices leading to Real Estate investing to take over.
• Large numbers of individuals and partnerships were formed to buy residential Real Estate.
• Foreclosures began to be purchased, renovated, and rented.
• Affordable rental homes provided options for those who lost their homes.
• Investment sales accounted for nearly 1 out of every 3 home sales in 2011.
Investors Influence on Housing Market
Investors tackled local market foreclosures. Through purchasing these low priced homes, buyer confidence and price stabilization begun. Investor-owned homes has established itself as a 100 Billion dollar business, becoming so numbered that today they outnumber apartments. Investors have also played a critical role in the stabilization of local real estate markets ravaged by foreclosures.
Who and What are These Investors?
The community of real estate investing has been rarely known. It cannot be defined easily how many are there, how active they are, or who they finance their transactions and choose to spend their time.
What is known is 3% of Americans or 7 million people consider themselves to be real estate investors, actively seeking to buy property within the next 12 months. 8% own investment property but have no current plans to buy more. 89% of Americans are considered non-investors.
The number of real estate investors today is about equivalent to the number of Americans who own Roth IRAs or the total number of money market fund shareholders.
The Real Estate Investors Profile
The typical real estate investor is under 55 years old and likely to live in the South or West. More than a third of active investors make more than $75,000 a year with 37% having a high school degree or less.
More than a third of real estate investors plan to buy more real estate in the next 12 months. This leaves almost 40% who plan to increase their purchases, 26% who plan to buy more in the current year than they did in the past, and 30% who want to purchase less.
Based on these profiles, confidence with the market is on the rise as rents will continue to be strong, prices will continue to rise, and properties today will appreciate.
Of the investors who plan to buyer more next year:
• 54% are between the ages of 35 and 55.
• 36% are planning to buy more properties next year to earn over $100,000 a year.
• 55% are college graduates.
Investors intend to spend a media of $7,500 a piece on repairs and rehabilitate their next purchases. Investors spend a combined total of $9.2 Billion renovating real estate.
• 16% will spend $30,000 or more.
• 29% will spend between $20,000 and $30,000.
• 12% will spend between $10,000 and $20,000.
• 18% will spend between $5,000 and $10,000.
• 40% will spend $5,000 or less.
Approximately 50% of the cost of rehabilitating a home goes towards labor and the other half towards materials. About $4.6 billion has an impact on local labor markets and $4.6 billion has an impact on local suppliers.
How Investors Finance Purchases
The myth that investors primarily use cash for investing in real estate is not true. Here are some statistics on where investors get a hold of funds.
• 24% plan to pay all cash for their next purchase.
• 12% acquire properties as exchanges under Section 1031 of the Internet Revenue Code.
• 4% use a self-directed retirement account.
• 51% put down a percentage of the purchase price and finance the balance.
• 44% of all investors use finance and put 20-50% down.
• Only 7% put down more than 50%.
• 9% use other means.
Over half of real estate investors finance the purchased with down payments up to 50%.