With home prices down more than a third from their peak and the market swamped with foreclosures, both private and institutional investors are aggressively competing to buy homes at deep discounts and fill them with tenants.

This has turned out to be a profitable strategy. Investors are buying homes at depressed levels (often below replacement cost), renting them for current income (unlevered net yields of 6% to 8%), and then selling them into an appreciated market. In short, it’s a good time to invest in the housing sector.