Investors have played a key role in the California housing market recovery for the past four years. Low mortgage rates, attractive home prices, and low yields on alternative assets have fueled demand for investment properties, particularly in markets where distressed homes have dominated sales. As the California real estate market has become more affordable in recent years, most investors purchased a property as a long-term investment.
Investors are attractive clients for REALTORS® because they are affluent and pay cash when purchasing properties. According to results from the 2013 California Investor Surveys from the California Association of REALTORS®, more than two-thirds of investors (67 percent) paid cash for their properties. Their primary motivation for purchasing real estate is based on the property’s profit potential and they are well-informed on the real estate business. Sixty-six percent of investors indicated they are going to keep the property for more than a year with the intent of renting, while about one-quarter (26 percent) of investors flipped or had the intention of flipping the property. Low interest rates and good rates of return have encouraged investors to hold onto properties and gain cash flows from renting.