Missouri Home Purchases By Institutional Investors And Cash Buyers Falls By Half From Year Ago

Institutional investors (entities that bought at least 10 residential properties in the last 12 months) are having much less of an impact on the housing market throughout Missouri than they were a year ago, according to a newly released report by RealtyTrac.  According to the report, during the 4th quarter of 2014 three percent (3%) of all residential sales in Missouri were to institutional investors, a decline of 50% from the 4th quarter of 2013 when institutional investors accounted for 6% of all residential sales in Missouri.

Cash home sales in Missouri has fallen by almost half as well, with cash sales during the 4th quarter in Missouri accounting for 10.3% of all residential sales, down nearly 50% from the 4th quarter of 2013 when a whopping 20.1% of all residential sales in Missouri were to cash buyers.  This is not surprising as a lot of investors (both institutional as well as individual) are cash buyers so as the number of distressed home sales continues to fall, so does the presence of investors in the market ergo there go the cash sales too.

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Institutional Investors Own Only About 1 Percent Of Homes In St Louis

The bursting of the real estate market bubble back in 2008 led to opportunities for investors to buy up homes at attractive prices throughout the country and even attracted some large firms backed by Wall Street such as Blackstone, American Homes 4 Rent, Colony American Homes and Fundamental REO.  While institutional ownership of commercial real estate, apartments and land has been very common, and in fact, predominant, since entering the business in 1979, firms like this investing in single family homes has not.  The best I can tell, St Louis has not attracted any of the four largest institutional investors (although it is hard to tell because they could own property in LLC’s not easily identified to be them) however, there has been plenty of investor activity here, including some by institutional investors.

So, what is an “institutional investor”?  Well, for the purposes of this article, and the data below, we’ll consider it to be an entity that buys at least 10 homes a year thereby separating them out from the small and/or occasional investor.  One such investor that has been active in St Louis is BLT (Building Land & Technology out of Connecticut) which, at this time, appears to own around 700 single family homes in the St Louis area. However, as the table below shows, ownership of homes in St Louis by institutional investors is pretty minimal, with those types of investors having acquired over the past 3 years (the most active period for this type of investment) at total of just over 6,000 homes or, just over 1 percent of the total housing stock in the five-county core St Louis market.

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