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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 78 J O U R N A L August 2023 based in Albany, New York. "Gray is the color of retreat. As we come out of the pandemic and return to our hectic lives, buyers want home to be a refuge. They want to withdraw and escape from the uncertainty of the out- side world, and rooms enveloped in dark gray can create that feeling of security." Zillow's paint color analysis is based on a series of studies of more than 4,700 recent and prospective home buyers across the country. In each study, they were randomly assigned images of a home with interior spaces and front doors painted in one of 11 or 10 colors, respectively. Each color received a score based on buyers' perception of the home, likelihood of touring the home and the price they would be willing to pay for the home. Zillow's research found that midtone gray can hurt a home's sale price when used on the front door, as prospective buyers would offer an estimated $3,365 less for a home with a cement gray front door. Buyers prefer black front doors to those painted gray, and would offer $300 more for a home with a midtone, rosy, brown front door. Earth tones are associated with higher offer prices when used in the bathroom, as bathrooms that were painted a trendy terra-cotta brown, a 2023 color of the year, could help a home sell for $1,624 more than similar homes. While a home's ultimate sale price is de- termined by a myriad of factors, this research shows that it pays to be strategic when spruc- ing up a home for sale. Most sellers make two improvements to their home before listing it, and interior painting is the most common proj- ect they take on. By selecting the right paint colors, sellers can appeal to more buyers this spring and potentially boost their bottom line. "Paint is a relatively affordable and easy change, yet it has an outsized impact on a buyer's perception of the home," said Aman- da Pendleton, Zillow's Home Trends Expert. "People don't buy homes every day, so they're trying to quickly process a lot of complex information in an area where they don't have a lot of experience. That uncertainty is likely why buyers rely on color as a powerful visual signal that a home is modern and up-to-date, or tired and needs maintenance. That first impression contributes to their overall feel- ings about a home and ultimately, how much they're willing to pay for it." INVESTOR PURCHASES PROPEL THE SFR MARKET A recent report by Alexander Her- mann, Research Associate for the Harvard Joint Center for Housing Studies, examines investor activity in the single-family rental (SFR) market over the past two decades. "Single-family rentals have long been an important part of the U.S. housing stock," said Hermann in the report. "But according to our latest State of the Nation's Housing report, investor purchases of single-family homes reached new heights during the pandemic, particularly lower-cost units and homes in Sunbelt markets." In Eight Facts About Investor Activity in the Single-Family Rental Market, Hermann keys in on the importance of the SFR market to the nation's housing stock, and the eight traits the market has exhibited over this time period, including: » SFRs have long been a substantial part of the rental stock » Investor activity in the single-family mar- ket increased significantly since the start of the pandemic » Investors are most likely to purchase low- er-cost homes » Investor activity is especially pronounced in Sun Belt markets with strong rent and population growth » Investor activity increased for investors of all sizes since the start of the pandemic, though much of the growth was driven by large investors » Rental property ownership is shifting away from individual ownership toward more ownership by business entities » Large rental operators own a small share of the SFR stock » SFR construction hit record highs during the pandemic "By 2021, there were 14.3 million sin- gle-family renter households, comprising about 33% of all renters," said the report. "Despite the more recent declines, there were still 3.5 million more single-family renters compared to two decades earlier." The number of single-family renters rose significantly from 2001, when 10.9 million renters were reported, to 2016, when 15.2 mil- lion renters were reported, before retreating slightly by 2021, when 14.3 million renters were reported. In terms of investor activity, it rose quick- ly in 2021 before peaking at 28% of overall sales in Q1 of 2022. An increase in mortgage rates forced investor activity to settle through early 2023, but it remained above the levels reported in 2019, even as owner-occupant home purchases fell below pre-pandemic lev- els. As a result, investors still purchased 27% of single-family homes in Q1 of 2023. By home type, SFR investors in Q4 of 2022, purchased nearly one-third of homes sold in the bottom third by metro area sales price, compared to nearly 25% of homes that sold in the top third. By location, the Urban Institute found that SFR investors who own at least 1,000 homes had 45% of their single-family hold- ings in six markets, primarily in the nation's Sunbelt region of Atlanta, Phoenix, Dallas, Charlotte, Houston, and Tampa. CoreLogic reported that during the time of the pandemic, investor activity grew for investors of all sizes, but especially for small (three to 10 properties) and larger-scale inves- tors with 1,000 or more properties. "Demand for single-family living in- creased during the pandemic and has been sustained by the aging of the large millennial cohort into its 30s and 40s—peak homebuy- ing years, but also the age many households form families," said Hermann in the report. "At the same time, rising interest rates and home prices have made homebuying less affordable, making single-family rentals an attractive option to many households priced out of homeownership.