RALEIGH – Real estate investors are picking up the pace of acquisition for property in the Triangle and across the state, including increasing activity of iBuyers in Raleigh, Charlotte, and Durham.
According to data analyzed by ATTOM Data Solutions, 10.3% of all single-family house and condo purchases in the second quarter of 2021 in the Raleigh market were to institutional investors, which the study authors described as non-lending entities that purchased at least 10 properties in a calendar year. That’s a year-over-year increase of 234%, up from 3.1% of all such transactions in the second quarter of 2020.
In Durham, 6.7% of properties sold in the second quarter of 2021 were bought by institutional investors, an increase of 140%, according to ATTOM Data Solutions.
The investors’ surge, which includes iBuyer companies, means more competition for home buyers in markets with already low inventory.
“Today’s buyers are facing a tough market and data shows they aren’t just competing with each other,” said Realtor.com Chief Economist Danielle Hale in a statement. “With deep pockets and more flexibility, investors can be daunting competition for the typical homebuyer.
“Right now, data shows investors are buying more homes than they are selling,” Hale added, “and while they get a lot of attention in today’s market, it’s worth remembering that they can also contribute to inventory levels.”
Acquisitions from the technology-enabled iBuyers like Zillow Offers, Opendoor, and Offerpad are taking place at the highest percentage in the country in the three metros. But interest extends beyond that, new data show.
“In this market, Opendoor and Zillow are buying everything,” said one licensed real estate agent based in the Triangle who WRAL TechWire spoke with this week, who preferred to remain anonymous. “Zillow just paid more than $100,000 more than the other iBuyers, who were already offering a high price for the property.”
Reports that measure how real estate investors are choosing to engage, or not, across the country from Realtor.com and from ATTOM Data Solutions show investors are taking note of appreciating property values across North Carolina. They note too the population growth and economic development activity in the state.
For some investors, said the agent, that means considering selling some or all of the properties in their portfolio, as one of the agent’s firm’s clients chose to do.
For other investors, though, the North Carolina real estate markets represent opportunity.
Report: Raleigh ranks #3 for housing growth for 2010-2020
That’s particularly true in the Charlotte market, according to the report from Realtor.com. It found that, of the top 50 most populous metropolitan regions in the country, Charlotte ranked second in the nation for the net change in available real estate market inventory for single family residences due to investor activity.
The report found that the net change, due to investor activity, in Charlotte was 287 properties. A recent Redfin report found that, during the second quarter, investors acquired 22.8% of the properties listed on the market with a total aggregate value of $782,143,504.
According to market report data from Canopy MLS, where most property is listed for sale in the Charlotte region, 4,678 properties were sold in April 2021 in the Charlotte region. Inventory, or the available supply of homes for sale in the region, was down nearly 67% year-over-year.
The Realtor.com report found that in the Raleigh market — which does not include Durham or Chapel Hill — the net change due to investors was 27 properties in April 2021.
But that doesn’t mean investors weren’t active in the Triangle.
“I believe the Triangle is a great place to live and work, and the real estate market has shown steady growth and double-digit return on investment,” said Kathy, a real estate investor who is active in the Triangle, who spoke with WRAL TechWire. She asked her last name be omitted. “These investment properties will also supplement my income after retirement,” she noted.
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The Charlotte real estate market saw similar growth to Raleigh in transactions to institutional investors, with 11.6% of transactions in the second quarter of 2021 had institutional investors as the buyer, an increase of 238% year-over-year., according to the ATTOM Data Solutions data.
The data set from ATTOM Data Solutions also showed that Winston-Salem saw a change of 231% year-over-year, with 7.7% of transactions in the second quarter of 2021 bought by institutional investors, and Greensboro-High Point saw a change of 209% year-over-year with 7.5% of transactions in the second quarter of 2021 sold to investors.
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“I believe in the market, I’ve been an agent since the 1990s, and I’ve seen the growth, and now everyone seems to believe it will continue to grow,” said Darcy Piscitelli, an agent with Coldwell Banker HPW in the Triangle, who works with investors and also invests in Triangle area real estate herself She said her belief is based in large part on the recent trajectory of the economic development in the region.
The data analyzed by Realtor.com shows that the median rental rate in the Charlotte market increased by 7.7% year-over-year and 5.4% year-over-year in Raleigh, with the researchers comparing April 2021 data to April 2020 data.
Demand also is high for rentals.
The August 2021 rent report for Raleigh, compiled by Apartment List, shows that rental rates in Raleigh are up 14.3% year-over-year, with the median rent for a two-bedroom apartment of $1,424. The report for Charlotte shows an increase in rental rate of 13.3% year-over-year and the report for Durham shows an increase of 12.6%.
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“Whether a market is appealing to investors depends on a variety of factors, including how local home prices compare to rents,” said Hale. “When home prices are rising and rents are more stagnant, investors are more likely to sell off properties and contribute inventory. On the other hand, the higher rents are compared to home prices the more attractive the market is to investors looking to buy homes and convert them into rental properties.”
According to new data, presented in a different ATTOM Data Solutions report, there are now more “equity rich” homeowners in North Carolina. Equity rich means that a homeowner, who currently has a mortgage on their property with a loan to value ratio of 50 percent or lower. In other words, the property owner holds at least 50 percent equity, and possibly more, if the home has appreciated in value since the time of purchase.
Statewide, the data shows that there are now 7.2% more homeowners considered equity rich in North Carolina than there were at this time last year.
In Wake County, there’s a growing gap in the real estate market
In local markets, nearly 3 in 10 homeowners in Raleigh are considered equity rich (29.4%), up 8.9% from a year ago and 34.4% of homeowners in Durham and Chapel Hill are considered equity rich, up 10.3% from a year ago.
In Charlotte, the data shows that 8% more homeowners are now considered equity rich than a year ago, with 31.2% of mortgagees now considered equity rich in the market.
“It’s hard to find good investments right now, because the pricing has gone up, but if you’re looking for strict appreciation,” said Piscitelli, many neighborhoods in the Triangle are still going to fit that strategy.
“Indications are that we are going to continue to be a strong market,” said Piscitelli. “I can’t guarantee that, but I tell my clients that I wouldn’t want them to invest in any area that I wouldn’t invest in myself.”
The ATTOM Data Solutions report also shows that the change in mortgagees considered equity rich has changed by double-digits in many western and northeastern states, such as Idaho (18.7%), Vermont (14.2%), Arizona (11.9%), Washington (11.2%), and California (10.8%). In addition, some of the western and northeastern states also house the highest percentage of equity rich mortgagees, with California (53.8%), Vermont (53.3%), Washington (49.4%) and Utah (45.5%), whereas the percentage of mortgagees considered equity rich in North Carolina is 28.4% as of the end of the second quarter of 2021.
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