Median Prices Up on Investment and Owner-Occupied Housing

All-cash buyers are fueling the rapid increase in median prices for investment housing and owner-occupied housing, according to new data from HomeUnion.

During September, the total median prices for these properties increased 17 percent year-over-year to $269,300, which marks the 55th month of year-over-year growth for this sector. The owner-occupied median sales price hit $286,900, up 15.8 percent year-over-year, while the investment median sales price reached $238,800, up 17.1 percent for the same period. The investment all-cash median sales price was $211,400, up 33 percent from September 2015, while the average cap rates for both financed and non-leveraged single-family rentals (SFRs) dropped 90 basis points to 5.2 percent.

“With a paucity of lower-priced inventory, SFR investors have started to target higher-priced assets,” said Steve Hovland, director of research for HomeUnion. “The elevated price of all-cash sales is indicative of investors’ uneasiness with lower-risk, dividend-yielding assets. More buyers are willing to lock in returns over the next five to seven years because they doubt the Fed’s forthcoming monetary policy will greatly benefit them. Investors are frustrated by sitting on cash, and each passing meeting with inaction from the Fed casts further doubt about how much fixed-income investments will improve over the short term. Therefore, the attractiveness of SFRs is getting amplified.”