Full-time investors are going strong, but average home buyers urged to tread with caution

By MEGHANN COTTER

Date published: 8/14/2005

Jim McClain Sr. remembers when hardly anyone showed up to purchase foreclosed real estate.

But the broker and owner of Greater Virginia Realty in Spotsylvania County said that lately it's not unusual to see 15 to 30 investors lined up on the courthouse steps, willing to shell out as much as $400,000 to $500,000 for property.

Career investors, he said, know they can spend that much and resell it for more in the area's hot market.

While many full-time investors are still basking in rising house prices, experts say now is not the time for average home buyers to try to keep pace.

"Right now [real-estate investment is] a rare commodity because there are so few homes that people can buy and try to live in," said Annette Roberts, real-estate agent with Re/MAX Supercenter.

In July 2005, the median sales price for a home in the Fredericksburg region was $335,000, according to the Metropolitan Regional Information System's online database.

The nationwide real-estate indicator shows that local prices have increased significantly every year since 2001.

Comparing sales each July, the year-to-year increase has been as small as 3 percent in 1999 and as high as 34 percent in 2005.

McClain said average home buyers might attempt one investment with those kinds of prices. But his company is seeing most buys from experienced people who already own a lot of property and have cash to spare.

And full-time investors aren't slowing down.

The National Association of Realtors reports that nearly a fourth of all the houses sold in 2004 went to investors. About 80 percent of investment properties are existing single-family houses.

Deb Angstadt, CEO of Chancellor Mortgage in Fredericksburg, said 25 percent of their customer inquiries were from investors before the 2005 summer selling season hit.

Real-estate agents say many investors are now coming from Northern Virginia or other areas that are priced higher than Fredericksburg. The profits from higher-priced markets can buy a larger amount or better quality of property here.

The median sales price in the Alexandria, Fairfax, Arlington and Falls Church area in July 2005 was $500,000, according to the MRIS database.

But those who continue to play the real-estate market are changing their strategies to be successful, Roberts said.

Date published: 8/14/2005