Real Estate
Join Tom Kelly every Sunday at 9am on KIRO Radio to talk Puget Sound real estate.Conversation starters
Most popular
Bonneville Seattle is raising funds for the construction of a second Fisher House at Joint Base Lewis-McChord in Tacoma and we need your help.Investor lift in housing may delay long-term recovery
December 3, 2012 @ 8:55 am
The rapid increase in home prices in some markets may wind up hampering the housing recovery, CNBC columnist Diana Olick reported.
"The reason is that the rise in prices is mainly due to investors, mostly large hedge funds, that have been swooping into the most distressed markets and inhaling properties as fast as their plentiful cash will allow," Olick wrote.
Investors are snapping up properties and turning them into rentals, unlocking some big returns - up to 12 percent - on their investments too. But as home prices rise, they're seeing their returns shrink.
"The worry with investment demand is that the very recovery in prices that it is driving will eventually reduce rental yields and undermine the investment case," said Paul Diggle of Capital Economics.
Olick says that the housing recovery is dependent on investors, since they tend to make all-cash purchases. With heavy restrictions in the mortgage market still in place, many typical home buyers are being shut out of the market, unable to finance a home purchase. Also, many home owners are still underwater - owing more on their home than it is currently worth - so they are unable to move.
Bonneville Media encourages site users to express their opinions by posting comments. Our goal is to maintain a civil dialogue in which readers feel comfortable. At times, the comments can descend to personal attacks. Please do not engage in such behavior. We encourage your thoughtful comments which: have a positive and constructive tone, are on topic, are respectful toward others and their opinions. Bonneville reserves the right to remove comments which do not conform to these criteria.