RALEIGH – If you are looking for a house, Raleigh’s apartment crunch This is not the only challenge, as real estate investors continue to buy homes and convert them to rentals across the region.
Throughout the first quarter of 2022, investors bought more homes in the Raleigh area than in the first quarter. This is an analysis of the data provided to WRAL TechWire by real estate agent Redfin nationwide.
The dataset began in 2020, and in the first quarter of 2022, investors bought 1,086 homes in Raleigh. This is an increase of 16.6% from the first quarter of 2021.
According to Redfin data, these sold homes account for 22.4% of the total sales market, with more than one of the five Raleigh properties sold in the first three months of the year being purchased by investors. Means
In Durham, investors bought 20.4% of homes sold in the region in the first quarter. This is an increase of 18.6% from the number of purchases in the previous year.
However, there may be signs that the real estate market is becoming less competitive.
why? Data from the Triangle Multiple Listing Service (TMLS), obtained by WRAL TechWire in May 2022, showed a dramatic decrease in the number of home shows during the month.
Mortgage applications are also declining, indicating that potentially fewer active homebuyers are trying to compete in the real estate market. Still, many homes have received multiple offers, but according to a TMLS report, the median homes sold in Wake County in May 2022 were flat, but in April 2022 in Durham County. Compared to that, the median dropped a little in May 2022.
Investors are still flipping through triangle homes
Still, the Triangle real estate market is profitable, says ATTOM Data Solutions.
This is a segment of the market where investors buy real estate, improve and repair it, and sell their homes again.
This practice, known as flipping, increased in both Durham and Wake counties in the first quarter of 2022 compared to the first quarter of 2021. ATTOM data shows.
In Dallam County, flipping increased 118% year-on-year and 252 properties turned around. In Wake County, 714 properties turned around in the first quarter, with flipping activity up 64%.
In fact, of all the metropolitan areas tracked by the ATTOM survey with a population of less than 1 million, the Durham-Chapelhill Metropolitan Statistical Area showed the highest reversal rate at 15.3% of housing. Data also show that in the Raleigh Metropolitan Statistical Area, 76.5% of all homes purchased for property repair or inside out were purchased in cash.
Even as a gross profit, total ROI will decrease
However, the data show that this practice can be less profitable for real estate investors.
Rick Sharga, Executive Vice President, said: ATTOM’s Market Intelligence “The bad news is that rising mortgage rates are starting to slow down home price growth, making buyers more selective and less motivated to outperform other buyers for properties of interest. This has a predictable impact on profits. Margins for investors. “
According to the data, the median total return on investment in Wake County’s reversed real estate was 13.1% during the quarter. However, it is down 5.8% from the previous year. However, on a dollar basis, the median-reversed home gross profit was $ 46,000 in the first quarter of 2022 and $ 46,250 in the first quarter of 2021, so there wasn’t much difference.
The same is not true for Durham County. In Dallam County, gross profit and total ROI for homes with reversed medians dropped dramatically in the first quarter of 2022 compared to the first quarter of 2021.
In the first quarter of 2021, the median flip of the house turned to a total revenue of $ 93,500 and a total ROI of 26.7%. However, in the first quarter of 2022, we found a gross profit of $ 58,700 and a total ROI of 19.8%.
Rental crunch worsens
A new national report on the state of the country’s housing market has found Raleigh to be one of the 20 largest US regional groups with the highest rent spikes in the past year.
The report, The State of the Nation’s Housing 2022, found that rents increased at a record pace across the United States in early 2022, including a national increase in single-family homes. Market segment.
Rents also increased by 22% in Raleigh, despite double-digit increases in rents in 116 of the 150 metropolitan statistical areas tracked in the survey. According to a report and corresponding fact sheets published by the author, Harvard University’s Joint Center for Housing Studies, this puts the capital in the top 20 of the county.
Moreover, even if the triangle market has cooled as mortgage rates have risen, Freddie Mac’s latest data show that it has risen by more than 0.5 percentage points last week and then this week as well. Monthly rents for housing units available in the triangle may also continue to rise.