The number of residents buying homes isn't the only statistic that has seen a sharp decline this year with the ongoing fallout of the credit crisis and subprime mortgage mess; the National Association of Realtors released a report last week that showed fewer people bought homes as investment in 2007. The number of houses bought solely for investment purposes last year dropped 18.1% from 2006, when the numbers were also steadily declining, off nearly 29% from the large numbers in 2005.
Many are saying that speculative buyers are the ones who have vanished from the real estate investment market, as those were the ones who some blame for the booming prices in real estate in recent years. Speculative buyers bought homes with the intent to sell them when their value increased to make a profit. But the continual increase in home prices couldn't continue at its pace forever, and now many buyers of homes who were looking to sell their properties for a profit are finding the homes valued at less than what they paid for them, leaving them upside down.
The NAR report said last year also saw the number of sales of vacation rentals fall 30.6%, compared with 2006 when vacation-home sales were at an all-time high. Though the numbers have fallen and are expected to do the same in 2008, some buyers are finding the market's current turbulence offers a great opportunity to buy when the prices are down. However, banks are pulling back on lending and some of those wishing to buy homes at these lower prices are finding themselves unable to get financing for the purchases.