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Investors are moving out of housing. Here’s why
Diana Olick / CNBC / July 22, 2013
They swarmed the distressed housing market, buying thousands of foreclosed properties and pushing prices higher faster than anyone expected. Now investors are pulling back, dissuaded by the higher prices they themselves brought about.
“Perhaps the numbers aren’t working out,” said Lawrence Yun, chief economist of the National Association of Realtors, which reported that just 15 percent of June sales were by investors. That is the lowest share since the association began tracking this cohort in October 2008.
Current homeowners are now driving the housing market, as even investor traffic fell in June for the fourth straight month, according to Campbell/Inside Mortgage Finance. That could mean slower sales going forward, as still tight inventory keeps move-up buyers in place. That, and negative home equity.
David and Heather Littlejohn are one of about 10 million underwater borrowers in the U.S. Millions more don’t have enough equity to afford a move up. The Littlejohns would love to sell the Oregon home they built as newlyweds in 2005 and move to a larger one, but that would mean paying into their mortgage.