Investors Drive Up Home Prices, Challenging First-Time Buyers
Real estate investors are outbidding first-time buyers, paying up to 4.3% over market value, according to data from Cotality, a real estate analytics firm.
Coupled with high mortgage rates and record-high home prices, this trend is making it harder for first-time buyers to compete. Cotality's principal economist, Thom Malone, found that investors routinely pay more than market value for homes, with premiums ranging from 1.8% to 4.2%, depending on portfolio size.
For a median-priced home of $405,000, this equates to an extra $7,300 to $17,415. These overbids often include all-cash transactions, waived contingencies, and faster closings.
“There are several reasons an investor might pay more than market value,” Malone wrote. “It can be a tactic to quickly close on a home, or it could be a speculative bet that the seller has underpriced a property. It could also simply be a lack of local knowledge.
Author's summary: Investors outbid first-time buyers, driving up home prices.
- Investors pay up to 4.3% over market value
- Premiums range from 1.8% to 4.2% depending on portfolio size
- Extra cost on a median-priced home: $7,300 to $17,415
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