Big institutional investors — companies that have purchased at least 10 properties in a calendar year — accounted for 5.9 percent of all U.S. residential property sales in February, up from a revised 5.0 percent of sales in January but down from 7.2 percent of sales in February 2013. February was the third consecutive month where the institutional investor share of sales declined on a year-over-year basis after 19 consecutive months of year-over-year increases, according to the latest report from RealtyTrac.
Among metropolitan statistical areas with a population of 500,000 or more, cities with the highest share of institutional investor purchases in February were Atlanta (25.2 percent), Columbus, Ohio, (21.4 percent), Knoxville, Tenn., (18.2 percent), Phoenix (15.2 percent), and Cape Coral-Fort Myers, Fla. (14.8 percent).
“Since Fannie Mae inventory is mostly comprised of completed home foreclosures with FHA loans, investors target these properties because they tend to be smaller homes that make for better rental property investments,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty, covering the Oklahoma City and Tulsa, Okla., where the institutional investor share of purchases dropped from a year ago. “There is very little Fannie Mae inventory left, which coincides with the fact that institutional investors have slowly backed out of the market.”
Metros with the biggest year-over-year increases in institutional investor share were Knoxville, Tenn., (from 3.3 percent in February 2013 to 18.2 percent in February 2014), Little Rock, Ark., (from 3.2 percent in February 2013 to 12.1 percent in February 2014), Milwaukee, Wis. (from 3.5 percent in February 2013 to 9.2 percent in February 2014), San Francisco (from 3.9 percent in February 2013 to 9.5 percent in February 2014), San Antonio, Texas (from 4.6 percent in February 2013 to 8.3 percent in February 2014), and Columbus, Ohio (from 13.3 percent in February 2013 to 21.4 percent in February 2014).