Last year investors accounted for 21% (about 1 out of 5) of new home purchases according to a new study by the National Association of Realtors (NAR).  That’s a whopping 1.35 million housing units – a large portion of the total market.  The record was set in 2005 at the height of the boom at 28%.

A major difference today is that investors are not buying to speculate and push prices up quickly as we’ve seen happen in the first half of the decade.  The median price for an investment property in 2005 was $183,500 compared to $150,000 in 2007.

According to the study, about 50% of the investors said they planned on holding onto their properties for anywhere from 3 to 11 years.  Another 18% planned to hold from one to three years and 20% were not sure.  Only 10% said they planned to sell (or flip) their property in a year or less.

The median household income of all home buyers last year was $71,700 while investor’s median income was about $93,000.  Interestingly 40% of all investor sales last year were accounted for by those under age 35.

The study also revealed that investors are optimistic about the direction of the market.  57% said they plan on buying additional property in the next 24 months compared to 44% primary vacation home buyers.  80% of investor buyers said that this is a good time to buy real estate compared to 59% of primary home buyers.

I agree that most real estate investors know there are many good deals out there.  They key is to have a clear investment strategy and know where to buy based on local economics and market timing.

With falling prices and rising inventories, investors are finding themselves in the best buying position in almost a decade.

A recent polls by Reuters/Zogby tells us that it’s a good time to buy. And another poll by Associated Press and AOL also reveals that it’s a good time to buy but 60% of those polled won't buy any real estate within the next two years.

The disparity is probably due to economic fears which are causing consumers to tighten their purse strings. The Reuters/Zogby poll said that nearly 75% of American’s believe the economy is in a recession right now, and almost 50% rated their personal financial situation as negative.

The AP/AOL poll said that nearly 14% of mortgage holders fear they will miss a mortgage payment soon. And 30% said they are concerned their home’s value will decrease within the next two years.

The important thing to remember is that you should stay focused on your local neighborhood and those of your real estate investments. Remember that real estate is primarily driven by local economic factors such as jobs, housing inventory, and supply and demand.