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Last year investors accounted for 21% (about 1 out of 5) of new home purchases according to a new study by the National Association of Realtors (NAR).  That’s a whopping 1.35 million housing units – a large portion of the total market.  The record was set in 2005 at the height of the boom at 28%.

A major difference today is that investors are not buying to speculate and push prices up quickly as we’ve seen happen in the first half of the decade.  The median price for an investment property in 2005 was $183,500 compared to $150,000 in 2007.

According to the study, about 50% of the investors said they planned on holding onto their properties for anywhere from 3 to 11 years.  Another 18% planned to hold from one to three years and 20% were not sure.  Only 10% said they planned to sell (or flip) their property in a year or less.

The median household income of all home buyers last year was $71,700 while investor’s median income was about $93,000.  Interestingly 40% of all investor sales last year were accounted for by those under age 35.

The study also revealed that investors are optimistic about the direction of the market.  57% said they plan on buying additional property in the next 24 months compared to 44% primary vacation home buyers.  80% of investor buyers said that this is a good time to buy real estate compared to 59% of primary home buyers.

I agree that most real estate investors know there are many good deals out there.  They key is to have a clear investment strategy and know where to buy based on local economics and market timing.