US housing market recovery fuelled by investors

Recent figures have shown an improvement in the US housing market. Property prices are up and the number of existing homes for sale is falling. However, a leading news source has reported that the continued upturn in the country’s housing market is as a result of investors rather than residential buyers.

CBS News reports that ‘if the housing upswing does continue, it will likely because of the trend's unique characteristics, with investors, more than consumers, sustaining momentum.’

Investors turning to property to maximise returns

Over recent months there has been plenty of positive news about the US property market. Fiserv has reported that average US house prices has increased 1.2 percent since summer 2011 while property prices rose in over half of the 384 metro area markets in the second quarter of 2012.

"Yes, the housing market is in a recovery," says Rick Sharga, executive vice president of Carrington Mortgage Holdings, a loan servicing firm. "All the metrics are pointing in the right direction - pending sales, sales of new and existing homes, price appreciation, and housing starts. Delinquency and foreclosure rates are both trending down. But it's not an explosive, booming recovery. It's a recovery in the sense that it's better than the horrible numbers we've seen over the past few years."

CBS News reports that ‘what makes the upturn in housing unusual is that it is mostly being fueled not by consumers buying a first or even a second home, but by investors scooping up distressed properties.’

Investors are struggling to get a decent return on traditional investments such as bonds and savings accounts. So, they are increasingly turning to the property market in order to benefit from rising capital values and rents.”

Author : Nick Marr

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