Team Says Housing Investors are Dwindling

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According to the real estate experts at, interest is starting to diminish among the investors who have been responsible for much of the housing market's recovery.

The team at -- a website that analyzes the latest housing market news and developments -- says that the investors who have been so vital to America's housing recovery are starting to pull back from the market.

After studying the monthly survey from Campbell/Inside Mortgage Finance (, saw that investors accounted for 20.2% of the nation's home purchases in May. That's down from 23.1% in February, when investor purchases were at an all-time high.

"Twenty percent is still a big chunk of purchases, but we think that the 3% drop is very significant," says James Paffrath, the co-owner of "Even though investors have played such a big role in the recovery efforts, we think it's actually the recovery itself that is slowing down investor interest now."

The team says one major factor that could account for the drop in interest is that the number of foreclosures and short sales around the country have gone down.

"Distressed properties are sold way below market value, so they're a great bargain," explains Paffrath. "When those bargains start to disappear, it becomes harder for an investor to turn a profit."

Additionally, says the team, America's home prices are going up quickly, which also makes it harder for investors to make money.

"Home prices have gone up 12% in the last year," ( says Paffrath. "While investors can sell the homes they have for more money, it also means that they need a lot more cash on-hand to buy new homes for their portfolio. That makes it harder for them to scoop up a bunch of homes."

A recent survey showed that about half of America's investors plan on purchasing fewer homes over the next year. ( After seeing those results, the team at says the landscape of the nation's housing market could dramatically change.

"If the investors keep pulling back, we're going to need the so-called 'traditional' buyers even more," says Paffrath. "That's the only way we're going to be able to sustain the progress we've made so far."

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