Real estate investors cite inventory shortages as their biggest challenge » RealtyBizNews: Real Estate News

In a recent survey, 63% of residential real estate investors cited a lack of home inventory as their top challenge.

The Winter 2021 RealtyTrac Investor Sentiment Survey, which measures investor perceptions of the real estate investment industry, also cited rising house prices as their second top concern, according to 60% of investors.

According to RealtyTrac, the results extend a trend observed in the previous two surveys. She concludes that the housing market is not as healthy as it was last year.

“Similar to our last two surveys, the issues of low inventories and rising home prices are the most frequently cited issues by retail investors across the country,” said Rick Sharga, executive vice president at RealtyTrac. “Combined with supply chain disruptions that have led to product shortages and increased material costs, it’s not surprising that individual investors think the market isn’t as healthy today as it was a year ago.”

Investors also see no end in sight, with 57% saying they believe the lack of inventory will continue to be a challenge over the next six months. Another 46% said they believe house prices will continue to be a challenge this year, while 35% cited increased material costs and 34% said they were concerned about rising interest rates.

The report comes after the National Association of Realtors said home inventory in December hit its lowest volume on record. Both investors and homebuyers suffer from limited options.

Concerns about rising inflation are also growing among investors, as the survey shows. About 39% of respondents said they believe higher inflation will increase the cost of labour, materials and consumables and make it harder for them to make decent profits. Another 30% of investors said they believe higher inflation could lead to higher mortgage rates, which could hurt affordability and weaken demand.

“One looming concern is inflation,” Sharga said. “Some 88% of investors surveyed were concerned that inflation could impact their business, whether due to higher material and labor costs, higher interest rates or rising consumer prices, which could weaken demand from potential home buyers and renters.”

Still, the majority of investors are still optimistic overall, with 54% saying they intend to continue buying and renting more homes.