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Investors’ Share Of Residential Real Estate Purchases Is Nearing A Record High, But The DC Metro Area Is Not The Center Of The Action

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Investing in real estate is not an easy way to get rich quick, despite how some ads on the Internet might make it sound.  It is, however, a solid business idea; after all, there is always demand for housing.  As house prices rise and the job market continues to reel from pandemic-related uncertainty, more people are putting their home ownership dreams on hold, and real estate investors are seeing opportunity.  Even in risk-averse real estate investing can be a lucrative business, but mistakes with regulatory compliance can easily tank your investment.  The best way to avoid getting a raw deal in real investment partnerships and to prevent mistakes that will cost you a bundle in taxes and penalties is to work with a Washington DC real estate lawyer.

The Latest Redfin Quarterly Report on Real Estate Investing

The real estate website Redfin recently published a report on trends in real estate transactions during the last quarter of 2021.  Real estate sales have rebounded to pre-pandemic levels, but homebuyers who intend to occupy the properties they buy are feeling a housing supply crunch, in large part due to investors crowding them out of the market.  Some real estate investors flip houses, buying them at low prices and then selling them to owner-occupants or to other investors, while other real estate investors buy properties with the intention of renting them out.  In the last quarter of 2021, real estate investors were the buyers in just over 18 percent of residential real estate purchases nationwide.  This is one of the highest shares of purchases by investors since Redfin started keeping data on this matter in 2000.

More than 75 percent of investor purchases of real estate properties were in cash, whereas most owner-occupants take out home mortgage loans.  Single family homes account for nearly three quarters of the real estate properties bought by investors, while condominiums account for about one fifth of such purchases.  Conventional wisdom holds that investors tend to buy the lowest-priced properties and then renovate them and either rent them or sell them at a profit.  In the past few years, though, the purchases have been almost evenly split among low-, medium-, and high-priced houses.  This could reflect a trend toward demand for high-priced rentals, or simply that homebuying is becoming less affordable for buyers of almost every income level.

The metropolitan areas with the highest share of investor purchases are in the Sun Belt; more than 30 percent of residential real estate purchases in Atlanta and Charlotte were by investors.  In temperate Washington DC, by contrast, investors accounted for only six percent of real estate purchases.  The DC area had the lowest percentage of investor purchases out of all of the metropolitan areas listed in the report.

Reach Out to Us Today for Help

A real estate lawyer can help you make legally sound decisions when purchasing real estate properties as an investor.  Contact Tobin, O’Connor & Ewing for help today.

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