Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence.
Jonathan Dienhart and Ken Lee, two analysts with the company, say between tight lending standards and a desperate search for yield by investors, cash purchases of homes – particularly for distressed properties – became even more common in 2011 than last year.

Dienhart and Lee analyzed data collected through Hanley Wood’s Housing IntelligencePro, and shared their findings in a blog post.

The two discovered that 38 percent of homes purchased in 2011 were bought with all cash. That’s up from 34 percent in 2010, and double the 19 percent rate in 2006.

According to Dienhart and Lee, this trend is likely to continue in the near term. They note that cash-paying investors are responsible for an increasing share of home purchases nowadays as prior homeowners abandon the ownership market and head back to rentals.

(MONEY Magazine) -- Most of the news lately about real estate has been dismal: Home prices are swooning, foreclosures ballooning. There is, however, one bright spot: the rental market, where demand is up and rents are rising. That's partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.

As with many investments, the best time to get in is when most others are sitting on the sidelines. To figure out whether you can benefit by investing in rental property, here's what you need to know.

The Case For Buying Is Now
Many factors make this a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities, according to recent Census data. That, in turn, has enabled landlords to charge more. Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010, to $1,320 a month.

You'll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors.

“As we ended the second quarter 2011, the metro [Atlanta] rental market seemed to show signs of stabilization,” according to a recent report from Databank Inc., a locally based real estate information service. “Occupancy is starting to be in the low 90s; rental rates seem poised to meander, but in an upward pattern; sales of complexes are increasing; and land sales are happening again.”

When I came to Atlanta from Russia 20 years ago, it was hard to believe that such a large American city could be so unfamiliar with the customs of those from other countries, or sadly, less welcoming. Fast forward 20 years to today and with the number of foreign investors moving to Atlanta increasing unlike we have ever seen in the past, specifically from Russia, the United Kingdom and France, these immigrants are welcomed to one of the most international cities in the U.S. As a matter of fact, 69 countries are represented in Georgia with either consular or trade offices, according to Georgia’s Office of the Chief of Protocol. While Atlanta provides foreign investors with the typical benefits offered by all large cities, such as an international airport and numerous cultural benefits, Atlanta offers more. The five benefits Atlanta offers to foreign investors that you might not immediately think of are:

1. Tax advantages. Georgia offers companies beneficial tax credits and advantages. One of the newest and most appealing of these tax credits is the Georgia Film Tax Credit that is available to not only traditional productions, like movies and television series, but also the growing industries of game development and animation. Since its signing in 2008, the Georgia Film Tax Credit has drastically increased the number of movies and television shows produced in the state, like “The Blind Side,” “The Last Song” and “Get Low.”

2. Atlanta is on the international map. When I first moved to Atlanta I was “people hungry” and longed to have others around me. However, today, Atlanta offers a vibrant ethnic community to residents, with a variety of authentic ethnic food, groceries and countless community groups that represent a dizzying count of countries’ cultures and religions. This provides the quality of life and international community support that is critical when moving to a new country. As Atlanta is now on the international map, it also provides residents support in the form of international schools, religious institutions, festivals, Consular Corps and international chambers of commerce, as well as various international trade commissions and international government investment offices.

3. Access to talent. With the large and diverse economic ecosystem available in Atlanta, companies and investors can find qualified, local employees, thus reducing the cost of transfers. This allows hiring companies to streamline their new hires quickly and without distractions. Our diverse population provides a huge benefit for those employers who want or need access to a multilingual workforce.

4. Language. In our growing global economy, it is imperative that companies be multilingual. Being multilingual creates benefits for companies that have been unrealized, and even unnecessary, in the past. The ability to communicate with diverse groups of people allows companies to stand out among the rest and Atlanta is rich in this diversity. For example, at my firm, Habif, Arogeti & Wynne, 10 languages and multiple countries are represented among our professionals.

5. Foreign venture capital firms looking to Atlanta. VC firms from around the world are turning their attention to Atlanta. For example, Russian venture capital firms, specifically in the technology sector, look to Atlanta to diversify their investments and now is the perfect time for companies to invest here. As home to CNN, the 1996 Summer Olympics and many Fortune 500 companies, Atlanta has the international name recognition investors are searching for.

In short, Atlanta is a growing, vibrant metro area of people from all over the world and presents benefits to foreign investors that are unmet in Atlanta’s main city competitors — Orlando, Chicago and Raleigh. Atlanta offers foreign investors, both the quality of life they seek and the business-friendly environment for which they are looking. These, coupled with Atlanta’s diversity and tax advantages, make Atlanta an ideal location for foreign investment. Unlike some metropolitan cities whose better days are behind them, ours are ahead of us.

The U.S. continues to remain a top destination for foreign buyers as international purchases surged by $16 billion this year, one of the highest increases in recent years. 

Historically, foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.

Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners. China was the second most popular country of origin, with nine percent of international sales this year. Tied for third were Mexico, the U.K., and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.

Want to know who bought that house up the street? Chances are, it was an investor.

Real estate investors are buying three homes for every one house bought by someone for their personal use, according to a Move.com study released today. And it's a pattern that's likely to continue in the next two years.

Today's investors are different from those a decade ago who bought homes and would flip them as fast as a stack of burning pancakes. Only 11 percent of today's investors expect to sell the property within 12 months, and 50 percent said that they plan on holding on for at least five years. Interestingly, the study found that only 36.5 percent of today's investors have experience in more than one property transaction. 

"This data suggests today's climate is hot for investing and is attracting a lot of new people that don't fit the stereotypical deal-driven flippers that buy and sell properties quickly," said Move, Inc. Chief Executive Officer Steve Berkowitz. "They're mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties."

Joshua Dorkin, founder of the Bigger Pockets website for real estate investors, says that savvy investors are definitely coming out in force. It remains to be seen what the implications are for the housing market overall, as more inventory moves from owner-occupied to rental units, he noted. Will rent prices decrease as more units become available?

While many investors are homegrown, there is a sizable segment of foreign investment occurring as well.

There might finally be some good news this year about the nation's dismal housing market. Or, at least, the bad news could stop. Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. 

Reasons to be optimistic have been sadly lacking since the housing bubble burst in 2006. For sure, last week we learned the widely watched S&P/Case-Shiller home-price index fell 1% in December, its fifth straight decline. The index tracks 20 major markets. But that figure belies real reasons to be optimistic, according to some experts. If they are right, it might make sense to jump into real estate. The trick is avoiding getting burned again, and it doesn't necessarily mean owning a home. First, let's recap the economic signs a bottom is close.

Houses Are a Good Deal
Housing is the most affordable it has been in decades, according to analysts at Moody's Analytics. They don't just look at house prices. They also look at incomes. Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years' pay, although that varies nationally.

Investors Stepping Up
Here's another sign the market is nearing a bottom: Investors have started to buy up houses and condos, in some instances paying entirely in cash. That's a far cry from the heady bubble days when borrowed money seemed the key to riches. The bubble-era speculators who got burned tended to buy at the peak and borrowed heavily to do so. When the crash came, they quickly saw their wealth erased.

Plan to Stay Put
Buy and hold. While the good news is that the worst of the housing crash might be over, the bad news is that the fast gains of the glory days of 2005 and 2006 won't be back any time soon. So to cover the costs of buying and selling, and what could be a prolonged recovery, plan to own for more than 10 years, explains Jack Ablin, chief investment officer at Chicago-based Harris Bank.