According to a recent report from the National Association of Realtors (NAR), 14% of residential homebuyers in Colorado are considered institutional buyers. This means nearly 14% of those buying up single family homes are companies and corporations.

Homebuyers who sold to institutions liked the speed of transactions, cash offers, and additional services like lease-back options. The percentage of institutional buyers in 2020 was 11.8% and in 2021, 13.2%. Colorado was among the states with the fastest amount of growth in this area, however, the states with the most institutional buyers are Texas, Georgia, Oklahoma, Alabama, and Mississippi. The study showed that markets with a fast-growing number of households, strong housing markets, and high incomes are the most attractive to institutional buyers.

NAR analyzed ten factors that they hypothesized are likely to attract institutional investors to a market area. They found that institutional buyers are attracted to areas with 1) higher household formation; 2) high density of minority groups especially Black households; 3) high density of renters; 3) high density of the Millennial age group; 5) high income and education; 6) many people moving into the area; 7) fast rent growth; 8) fast home appreciation ; 9) fast home sales growth; and 10) lower rental vacancy rate.

In areas with higher share of institutional investors, renter accounts for 30% of households on average compared to 27% in areas with lower share of institutional investors. The implication is that while institutional buyers who purchase existing-homes to convert to rental provide rental housing, this takes stock away for future homeowners.

While competing against investor buyers, there are still some great options to be found on in the Denver market. The first step is to get an experienced pro in your corner. Contact Metrowest today and let’s discuss your options!