New data made available has shown that a number of companies, including Oaktree Capital Group and Blackstone Group, are outbidding owner-occupiers by between 5% and 25%. This allows them to purchase the properties in order to rent them out and take advantage of the increasing rents that are being asked due to the number of people seeking to rent properties rather than buy.
Property prices, which are still at around 31% below the prices they reached at their peak despite recent gains, make an attractive proposition to investment firms. It is expected that investment companies will spend around $8 billion purchasing distressed properties in order to let them out.
One of the side effects in this is that there is a rise in the number of construction projects being started as investors look to improve rundown properties, with an extra $1 billion expected to be spent on improvement works.
Chairman of GTIS Partners, Tom Shapiro, said: "The housing market's turning around. Maybe the silver bullet for housing is the single-family-for-rent, because it's underpinning the market. It's sopping up the excess."
Michael Krein, president of the National REO Brokers Association, added: "There's almost no product left to buy right now. A couple of years ago you might have had four or five major players that would bid on non-performing loans and REO pools. Now there are probably 50 or 60 that can bid on these."
A spokesperson for RealtyTrac, who produced the latest data, said: "The shift we've been seeing in the last few quarters that continued in the second quarter is short sales are catching up with bank-owned sales."
