Investment Home Prices Rising Faster Than Owner-Occupied Home Values

Staff Report From Georgia CEO

Monday, April 4th, 2016

HomeUnion, an online real estate investment management firm enabling value investing in residential properties, has released February 2016 data on investment homes and owner-occupied homes. According to HomeUnion's research, year-over-year median investment home prices increased at a greater rate – 5.1% – than owner-occupied home prices, which rose only 1.1%. However, prices for investment homes were $185,500, compared to $236,900 for owner-occupied properties.

"Traditional home prices have peaked in light of stagnant wage growth and a lack of lower-priced properties available on the market. Nearly all of the increase in investment home prices was in the cash sector, where there's still significant demand," explains Steve Hovland, manager, research services at HomeUnion.

"February's home price figures highlight the attractiveness of single-family rentals in an uncertain environment," he continues. "Since last August, when weakness in the global stock markets began to erase equity, investors have been repositioning their portfolios to hedge against uncertainty. We're seeing the results in higher investment home prices, particularly in the all-cash segment."

Some takeaways from the existing home sales report:

  • Most buyers utilized leverage to acquire investment homes while interest rates were low. The owner-occupied price of $236,900 closely mirrored the leveraged-investment price of $239,100. Over the past year, the median sales price for these properties inched up 1.1 percent and 0.6 percent, respectively.

  • The overall median sales price climbed 3 percent during the past 12 months as investors began to grow weary of the volatile equity markets and redistributed their portfolios. The median investment sales price was $185,500, up 5.1 percent year over year. Average investment cap rates compressed 40 basis points to 6.1 percent during the 12-month period ending in February. Investors accepted first-year returns of 4.7 percent for leveraged transactions.

Here's more detail on how investment home prices compare to traditional home prices:



 YOY Change

Total Median Sales Price



Owner Occupied Median Sales Price



Investment Median Sales Price



Investment Cap Rate


-40 bps

Cash Price



Cash Cap Rate


-50 bps

Leveraged Price



Leveraged Cap Rate


-20 bps