Hello and Welcome to another
episode of Selling Greenville your
favorite real estate podcast in the
Greenville area of South Carolina I am
your host Stan McCune realtor here in the
Greenville area of South Carolina as
always you can find all of my contact
information in the show notes if you
need to reach out to me for any of your
real estate needs I represent I
represent sellers I represent investors
I represent
non-investors the whole enchilada I can
handle anythingall any of your real
estate needs even if you're looking for
commercial properties I can refer you to
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appreciate it all right todaywe're
going to talk just briefly I think
about Investors Real Estate Investors
and their impact on the real estate
market and you know there's a lot of
misconceptions about Real Estate
Investors that are out thereI hear
the full spectrI hear people that
are actually just angry at institutional
investors believe that institutional
investors are primarily and when I say
institutional investors I meanMega
companies that invest in real estate
that you know are maybe based out of San
Francisco or something like
that lot I hear a lot of people that are
just angry that just think these
institutional investors areare
destroying the country specifically in
Greenville taking homes away from
first-time home buyers etc
etc and then you you hear on the other
end of the spectryou hear people that
are just likeinvestors don't really
have that big of an impact on the market
it's normal and healthy for investors to
to to be doing the level of activity
that they're doing and then there's a
ton of sentiment in between now I'm not
going to get into theinvest is the
investor good or is the investor bad or
are there certain ones that are good or
certain ones that are bad conversation
I'm not going to I'm not going to go
down that roadbut instead what I'm
going to do is I'm going to look at some
data that core logicreleased earlier
this month inJuly 2022 they released
some data on investors and what impact
they are having in the market and I have
kind of five takeaways from this and by
the way this isn't Greenville specific
This Is Us
Nationwide there are some conclusions
that we can draw from this data and I
have specificallyfive conclusions
that I want to share with you guys
and I plan to link to the actual article
in the show notes as well so that's
something if you want to look at it
you can feel free to look at it look at
the graphsagree or disagree with my
conclusions whatever youwhatever you
plan to to do thereso for starters
here here's my first conclusion from the
data that that core logic released and
and the name of their article is single
family investor activity bounces back in
first quarter of 2022 so you know as
with a lot of data sometimes we have to
look you know some sometimes the data
that gets released is lagging behind by
a few months and so this is an example
an example of that in in real estate
terms we're usually able to get local
Greenville related datafor the prior
month you know usually about Midway
through the month that's pretty common
for other markets when you're looking at
Nationwide data of often times it's
several months behind so that's the case
here we're looking primarily at the
first quarter what happened in the first
quarter of this year January through
Marchand drawing conclusions from
that my first
conclusion that I've drawn from the data
that core logic produced is that
investor purchases took off in the first
quarter of 2021 so if we go back to the
first quarter of last year that's when
we started to see investor purchases you
know they had been kind of constant for
a little while basically at the same
level just fluctuating a little bit but
basically keeping constant for several
years and then we saw something happen
in the first quarter of 2021 they really
the the percentage of transactions that
were investor related transactions in
the US just started going upand even
though it looked like it may go down to
start this year soit got up to about
27%of all purchases were investor
purchases about
27%towards themiddle to end of
2021 then we saw it just plummet in
in towards the end of the year towards
the end of of 2021 it went down to
22% well this looks like simplyit it
would be normal for those numbers to go
down back to what they used to be which
was typically hovering between 14 and
18% went down to 22% and it was like
okay maybe it'll it'll start to recess
back toto that Norm of being between
14 18% but no actually it bounced back
in a very seasonally unpredictable way
when we got into the first quarter of
this year it actuallypeaked even
higher than it did all of last year it
got up to
28%in I I believe it was the month
of March and then it kind of settled at
20 basically right there insorry in
February and then it basically settled
there in March at
27.9% so very high numbers what does
this meanwe're not sure yet there
are two possibilities rightthese the
graph looks very seasonal it looks like
what we typically see for non-investor
purchases so for non-investor purchases
we typically see everything really slow
down and not come to a halt but we see
purchasesjust in general closings in
general new contracts in general new
listings in general slow down as we get
towards the end of the year and then
ramp back up and start going up at the
after the New Year well if that's what's
happening here then we might see we
might have a new normal with investor
purchases we may have a new normal of
investor purchases now being in the mid
to high 20% rather than the mid to high
teensif if they are following the
seasonal Trend that we normally see
there's also the possibility because
we're looking at quarter 1and we
don't yet have the numbers for quarter 2
it's also possible that there was kind
of a Mad Dash that happened in quarter 1
as people saw interest rates going up
perhaps these investor purchases will at
some point recede but the point is
that we we've seen investor purchases
since the first quarter of 2021 much
higher than normal and they are still
much higher than normal and there's a
possibility that this is a longterm
Trendand it'll be very interesting
to see how that continues through
through the end of the year I tend to
thinkpersonally I think it is kind
of a new normal just based on my
communications with people my boots on
the groundthere's a lot of people
looking to invest for the first time
and a lot of theinvestors that have
been investing for a long time they're
wanting to invest more and more so I I
tend to think that this is kind of
that the theory that this is the new
Norm I think may very well be accurate
but we'll have to continue to to
track this through throughout the rest
of the
yearmy second conclusion from
from the data in this core logic study
is that increases in investor
purchases are the primary reason the
market currently is still hotter than
pre- pandemic non-investor purchases are
at similar levels to 2019 this is really
important owner occupied purchases
Nationwide according to the Nationwide
data are actually very similar to the
prepandemic Norms but investor purchases
are at levels that are nearly triple
what they were in 2019 so we're seeing o
owner occupants purchasing properties at
basically prepandemic levels of what
they were what they were doing looks
very similar slightly up from
prepandemic
but basically owner occupants are
buying properties at similar levels to
back then but investors are purchasing
three times the properties that they
normallythat they normally would at
least based on the first quarterso
if we look at kind of where the market
has been so far this year as rates have
have gone up and all of that really
we're starting to see in levels as as we
discussed in last week's episode start
to balance out a little bitbut what
this tells me because we're we're seeing
we still see that the market is hotter
than what it wasbefore the pandemic
but the fact that it's still it's at
pre-pandemic levels basically of owner
occupied purchases that hotness is
directly correlated with investor
purchases so againis it's going to
be very important for us to track these
investor purchases because it seems like
that is fueling a lot of the hot Market
that we still have to this day and if
investor purchases start to cool down we
can probably expect to see the market as
a whole cool down a little bit more
because it seems like that there is a
direct correlation between what
investors are doingand what is
happening in this market third
conclusion thatthat I come to here
from this data is that institutional
investors are a minority in real in the
real estate investing world but they're
growing this is one of the things that I
think is important to understand a lot
of people think that these institutional
investors these huge firms that are just
buying up real estate that they are the
primary ones fuelingbasically the
primary ones behind real estate
investing as a whole and that's that's
really not accuratethe data is
broken down right in this article and
and it explains it really well so I'm
just going to go ahead and read exactly
what it says so small investors those
who own fewer than 10 properties were
responsible for half nearly half 48% of
all investor purchases during the first
quarter of the Year mediinvestors
those with 11 to 100 properties purchase
31% of investor properties all right so
79% of of investor property purchases
were made by small and medium-sized
investors not the institutional type of
of investors that a lot of people think
are the main ones
responsible large investors those with
101 to a th000 properties accounted for
9% of Home purchases and mega investors
those with over 1,000 properties
represented 12% of all purchases so
you can see that it's it's primarily
small and mediinvestors that are
making the majority of the purchases in
this market but those Mega investors
those that own a thousand or more
properties they have seen a massive
uptick during this time that we've seen
this investoruptick since basically
early 2021 we have seen a dramatic
uptake in the mega investorssegment
getting involved so it used to be that
the that the large investor as it was
defined before and the mega investor
basicallybasically had comparable
levels of spending usually in in or I
should say a comparable market share
when we're looking at investor purchased
properties usually they were both around
like 8 to 9% something like that and
there really wasn't much of a difference
but since early 2021 the mega investor
has gone way up in spending and the the
large investor has ticked up a little
bit as well so that now we're seeing way
more of this institutional type of
investing even though it's still a
smaller percentage of the overall Pi it
is a growing percentage of the pi so
institutional investors are definitely
drivingsome of the hotness that
we're seeing in this market there's no
way around that they are definitely
having an impact becauseas their
numbers have gone upbasically the
entire Market's numbers have gone
upmy fourth conclusion from this
data and this is really a conclusion
that core logic came came toso maybe
it's not really my conclusion maybe it's
more justme just kind of agreeing
with the data and saying okay yeah this
is a big takeaway for me investors are
focusing more on rentals than onthan
on
flips they broke down the data of the
share of investor purchases resold
within 6 months from January 2019
through September of
2021 and the percentage so it used to to
hover between
like 15 and
18% of investment properties that were
purchased were sold within 6 months so a
15 to 18% flip ratethat number has
been at least you know again this data
lags a little bit because it's only
through September of 2021but
basically the majority of 2021 it was
below 15% and that's a historically
very low rate so it seems like at least
for 2021 we'll have to see you know as
more data for 2022 comes out but a lot
of investors are just looking to park
cash in a rental they're not looking to
to flip properties at the rate that they
used
to very interesting Dynamic that's
something also that I have have
personally seen with my investor clients
and I and I think inflation concerns
have a lot to do to do with this people
you know I I heard people last year
early last year saying that they were
concerned about inflation and what that
would do to the marketand sure
enough their concerns became true this
year andand so a lot of those people
were were looking to to park money in
rental properties and so this is the
kind of thing that we see it wasit's
not it's not surprising it's not
surprising that people are moving in
that direction and have been since last
yearmy fifth takeaway from this
investors are primarily targeting the
southeast and the South West now I need
to clarify that Greenville traditionally
doesn't show up on these types of of
metricsbasically this study was
looking atmsas which I believe
stands for Metropolitan statistical
areas usually Greenville is not big
enough to kind of make some of these
metrics so we have to to kind of read
between the lines here but here are the
areas the top 10 investor shares by
Metropolitan statistical areas in
quarter 1 of 2022 it was Atlanta the
Atlanta area the San Jose area the Los
Angeles area Memphis Las Vegas Phoenix
San Antonio El Paso Dallas Fort Worth
Charlotte and San Diego so heavy shares
of the southeast and of the Southwest in
here and the number one market with the
highest percentage of investor shares
was the Atlanta Market one of
greenville's neighboring markets it was
over 40% 40 over 40% of purchases in
Atlantafor the first quarter of this
year were by investors that's insane
that's absolutely insaneCharlotte
was just a hair below 35% another one of
our kind of cousin
markets andyeah the out of these top
10 really the lowestwas was San
Diego which was at about 34% so that's a
huge those are huge numbers right huge
numbers over a third of purchases in
several of these markets including the
two biggest markets that neighbor
Greenville wereinvestor purchases
were over a third of the closings that's
insane that tells me Greenville is
probably pretty comparable to both
Charlotte and Atlanta in this regard so
we're probably seeing about a third of
purchases if not more being made by
investors so investors again are
definitely having a huge impact in our
area in the Greenville area still
heavily targetedthey're they're
preferring that this study core logic
kind of says that warm areas they're
kind of they kind of come to the
conclusion that warm areas are kind of
what investors are targetingand I
think it's you know obviously some of
these markets are pretty big markets
like Los Angeles and and San Diego but
it seems like they're they're targeting
trendy areas areas that are up and
comingI think people still consider
Atlanta and Charlotte to be upand coming
because the southeast economy is growing
at at a at a rate that I think much
of the rest of the US is not growing at
and so I think that that's a lot of what
we're seeing here so
investors are definitely impacting the
market Nationwide but specifically here
in the Southeast and we need to keep
watching what's going on there because
it seems like there is a direct
connection between the market staying
hot and whatinvestors are doing so
we'll continue to monitor this as the
year goes on it's going to bevery
interesting to see exactly what happens
what investors do as interest rates keep
going up will they be impacted by that
or are they just paying cash anyway so
it doesn't matter there's a lot of
things to consider but that is all for
today's episode of selling Greenville
for this week's episode of selling
Greenville I appreciate you guys
listening I apologize for a little bit
of an echo in this week's episode from
the standpoint of the sound I'm
rearranging some things in my office I
need to kind offigure out exactly
how tominimize that Echo so bear
with me as I try to work on that if you
don't mind please leave a five-star
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see you guys next time
[Music]