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Higher home prices deter investor purchases in central Ohio | By: Jim Weiker


Higher home prices deter investor purchases in central Ohio

By Jim Weiker The Columbus Dispatch  •  Friday February 20, 2015 2:11 AM
Real-estate investors bought fewer homes in central Ohio last year as an improving economy drove up prices and drove away the bargains.

Institutional investors bought 766 central Ohio homes in 2014, down from more than 800 in each of the previous three years, according to the real-estate information service RealtyTrac. The organization defines institutional investors as entities that bought at least 10 properties during a year.

In addition, RealtyTrac found that 8,927 central Ohio homes were bought in cash last year, down from 10,512 in 2013. Such purchases are considered a measure of investor activity because investors often buy in cash.

The biggest out-of-state investment companies active in central Ohio, American Homes 4 Rent and Silver Bay Properties, scaled down their purchases last year after aggressively buying in 2012 and 2013.

An improving economy, coupled with low interest rates and few homes on the market, helped push up central Ohio home prices more than 5 percent last year, making it harder for investment firms to find the deals they covet.

“The market has clearly gotten better,” said Steve Zehala, executive director of the Columbus Real Estate Investors Association. “The market has clearly gotten better.”

While prices remain low in some inner-city neighborhoods such as Linden, Zehala said deals have become especially hard to find in middle- and upper-income neighborhoods, where American Homes 4 Rent and Silver Bay have been active.

“When you get over $100,000, competition is much harder,” he said.

Nationally, institutional investor activity declined to a four-year low in 2014, according to RealtyTrac. Last year, 105,278 single-family homes were sold to institutional investors, down from 153,450 in 2013.

In addition, 944,892 single-family homes and condos were paid for with cash last year, down 13 percent from the previous year. They represented 30.9 percent of all sales during the year — also a four-year low.

“The true impact of these investors can be seen more clearly at the hyper-local level,” said RealtyTrac Vice President Daren Blomquist in a news release.

Blomquist noted that in some communities, institutional investors and those paying in cash accounted for more than half of all home sales during the fourth quarter of 2014.

Among large metropolitan areas, Miami had the highest share of cash sales in the fourth quarter, 58.1 percent, followed by two other Florida cities: Sarasota (54.3 percent) and Fort Myers (53.9 percent).