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Are investors to blame?

July 11, 2022

“About 2.5 million households shopping for a first home will be shut out of the market this year, estimates Nadia Evangelou, senior economist with the National Association of Realtors. That amounts to 15 percent of all first-time home buyers. In an already daunting market, investor purchasing is adding to the obstacles.” Writes Sophie Kasakove for The New York Times.

Large investment companies as well as smaller local owners are buying up homes all over the US, and their share of the housing market is growing. According to Redfin, the fourth quarter of 2021 saw investors buy an average of 18.4 percent of homes, a rise of 12.6 percent over the previous year. In the Sun Belt metro areas that share was greater than 30 percent. Significant rent increases have been a result of this buying frenzy by investors. Driven by inflation as well as pandemic demand median rents in some cities rose by 30% or more in 2021. Those rent increases have provided massive profits for landlords and pain for renters.

This growing trend brings many problems. As rents outstrip wages, people face the choice of paying a much larger portion of wages in rent than they can afford or simply having to move. There are other issues for renters too. Some studies have found that large corporate landlords are more likely to raise rents, poorly maintain properties or evict tenants. Renting just doesn’t provide the long-term stability or the opportunity to build wealth that home ownership does.

While some proposals have been made – like subsidizing housing or legislating to curtail corporate homeownership – nothing concrete has yet been set in motion. For now, home buyers can only hope that they will not be pushed to the brink.

Read the original article here.

Image by Erik Mclean from Pexels, modified

Filed Under: All, Equity, Investing, Learn Tagged With: Affordable housing, Equity, Investing

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