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Foreign investors bet on recovery

By Judy Martel · Bankrate.com
Monday, March 4, 2013
Posted: 10 am ET

The housing recovery is looking pretty attractive to foreign investment firms that are buying properties at a discount in the hopes of realizing a return as prices and demand increase.

For the past few years, smaller investors in the housing market have given way to larger U.S. private equity firms that have been buying tracts of homes or rental buildings. Now firms from Europe, Australia and Canada are entering the market by buying properties to rent and eventually sell, according to The Wall Street Journal.

While investors may be making a solid bet on an improving housing market, there are detractors who believe the entry of large investment firms based here and abroad is crowding out individual investors. U.S. firms complain that foreign firms can take advantage of currency exchange rates to outbid them.

Smaller investors who buy a house or two at a time to rehab and rent or sell also accuse the large firms of damaging housing values because they buy in such bulk that they can't properly maintain the properties.

John Taylor, CEO of National Community Reinvestment Coalition, told The Wall Street Journal that these firms are promoting rentals over homeownership, thus depressing home values.

On the other hand, the investment in wide swaths of properties can help housing markets return to health, according to Doug Duncan, chief economist of Fannie Mae. "Investors are a huge benefit to the market in that they help work off that excess inventory through transferring them to rentals while owner-occupant demand rebuilds," he said.

What do you think about large investment firms buying properties to rent or sell?

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1 Comment
Ray
March 05, 2013 at 9:50 am

In the case of certain condominium complexes, an increased percentage of investor owned (rented out) units can depress prices. There seems to be a serious lack of first time buyers which is in part being offset by the investor market.