By: Esther Cho: According to data from Clear Capital, over the last year, REO prices have increased 5.5 percent, while fair market prices dropped 2.9 percent. The real estate data provider explained that demand for REOs is most likely causing the increase in prices and named Carrington Holding Company, Amherst Securities Group, and Waypoint Financial as examples of investors purchasing single-family REOs with the purpose of converting them into rental properties.
“There has been quite a bit of buzz in the housing industry surrounding turning REOs into rentals. Our data suggests early activity from these programs could be starting to take effect, with national REO-only home price gains on a price per square foot basis vastly outpacing fair market prices on a national level,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital.
According to data from the Census Bureau, rental vacancy rates have also seen a steep decline, with the rate at 8.8 percent in the 2012 first quarter, a significant decline from the 2010 first quarter, when the vacancy rate was 10.6 percent.
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