Institutional investors expected to exit market in coming years

Large-scale investors have helped prop up the housing market during the last few years by snapping up homes that otherwise might languish on the market.

But over the next few years, they are likely to unload most of the homes they’ve purchased, and that will have a meaningful impact on the housing market, according to a majority of forecasters polled by Zillow in its latest Home Price Expectations Survey.

When asked about the impact of a sell-off by institutional investors, 79 of respondents to Zillow’s survey who expressed an opinion on the matter said it would have a “significant” or “somewhat significant” impact on the market. Fifty-seven percent of that group also projected that institutional investors would sell the bulk of their portfolios within the next three to five years.

To Zillow Chief Economist Stan Humphries, that could be a boon to everyday buyers now that the housing market appears to have stabilized.

“Buyers entering the market in the next few months will not be competing with cash-rich investors like they were last year, which should be some small solace given the higher prices and mortgage rates that they will encounter,” he said. “The gradual decline of investor activity should be viewed as another sign of the market slowly returning to normal, and I agree with the panel’s expectations that there will not be a rush for the exit by institutional investors.”

Source: Zillow