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Investors Key to Housing Market Recovery: Re/Max CEO

Foreclosure
Fuse | Getty Images
Foreclosure

The housing market will be mainly "bumping along the bottom" over the next year or so, but investors will be a key factor in the market's recovery, Re/MAX International Chief Executive Margaret Kelly told CNBC Tuesday.

The Case Shiller housing data released Tuesday showed home prices rising slightly for the first time in eight months. Kelly said her company's data show a 3.8 percent rise in home sales over the last three months.

Many of those sales are investors who buy homes in foreclosure, fix them up and rent them out.

"Think of how many people are being foreclosed upon," she said. "They’re not going to be able to buy homes. They’re going to be renters. What we’ve found is right now 20 percent of the buyers out there are investors. Of the investors, 75 percent of those are all-cash deals."

She added, "A lot of the investors are normal people who are going out and maybe buying their first investment home that they’re going to fix up to rent. They have a very full renters market."

The more investment home buyers, the better the chance of a housing recovery "because it means the prices have stabilized," Kelly said. "Investors don't jump in the market unless that price is at a good bottom," she said.

Gone are the days of buying a house, immediately selling or "flipping" it, and making 50 percent on your investment, Kelly said, noting that was one of several factors, including poor lending practices, that contributed to the housing problem.

"If you get back to good lending standards, you go in a house and use it as a home and over X period of time then you sell, you’re going to make money," she said. "But you can’t buy a home, flip it before a nail is in a piece of wood, and hope to make money on that in this market."