What happens when Wall Street comes for the starter home?
In a slightly depressing piece of journalism, the New York Times documented the answer to this question by exploring sales in a neighborhood of Charlotte, NC. Between 2021 and 2022 one-third of the houses in just one block of this 34-year old subdivision were bought in all-cash deals by investors.
And then they were converted to rental housing.
What has the impact been? A few years ago, Bradfield Farms was truly affordable. You could buy a starter home here – a modest house for around $200,000. That is no longer possible. First time home-buyers are struggling with high interest rates and competing against all-cash buyers. This is not a fight that is easy to win.
There are lots of other reasons why affordable for-sale houses are disappearing. But this one is an unexpected outcome of a poor economy and the overwhelming desire of investors to make money and will have long-lingering effects. It is unlikely that any of those homes will ever be an opportunity for a first-time home buyer again.
And of course this means that we all have to work harder building new ones.