Are investors ruining the housing market?
Investors are buying a bigger percentage of homes than they did during the boom. Is this boosting the market or just distorting it?
We’ve heard a lot lately about how investors are playing a major role in the housing market. Those include both individuals who buy a few rental properties and private equity funds that buy houses by the hundreds.
As the number of homes for sale has shrunk, first-time homebuyers and others who want to buy a home with a mortgage have been frustrated about being beaten out time and time again by investors paying all cash.
How many homes are investors buying? CBS MoneyWatch’s Ilyce Glink reports that in many cities, investor activity is the highest it has been in a decade.
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MoneyWatch asked DataQuick to look at purchases in 28 cities around the United States. The conclusion? "In all but five markets, investor activity is up over the 10-year average."
These are some of the numbers:
- Los Angeles: 25% of purchases are by absentee buyers, compared with 11.5% at the peak of the boom in 2005.
- Miami: 42% of purchases in 2012 were by absentee buyers, compared with 33% over the past decade.
- Las Vegas: 51% of purchases are by absentee buyers, up from a 10-year average of 41%.
- Cincinnati: 35% of purchases by absentee buyers, compared with 22% over the past decade.
Statistics from the National Association of Realtors show that 19% of home sales in January were to investors, compared with 23% in January 2012. All-cash sales were responsible for 28% of transactions, compared with 31% a year earlier.
What does the investor role mean for the housing market? Glink writes:
Some housing activists are crying foul over the investor-driven recovery in housing. Under this view, investors are taking away homes from people who otherwise would be able to buy an affordable property. Investment firms also act as a ready buyer for banks that opt for foreclosure and short sales over loan modifications that would keep homeowners in their homes.
The data raise an interesting question. Are investors leading the recovery and buying homes that families can’t buy, either because they can’t get mortgages, have too much debt or don’t make enough money? Or are investors keeping families out of the market by buying up all the good properties for cash, making it nearly impossible for regular buyers to compete?
So let me see. They buy these homes, wait a couple months and re-list them for 40%+ more. Yeah, it's no wonder no one is buying it. LOL
I am a first time buyer and I cannot find a good home. I'm seeing a bunch of run-downed, poor condition homes here in CA going for $500,000+. You have to be kidding me.
I'm also seeing these newly built homes with a total sq footage of less than 2k, going for $600,000.
I mean, at this point and time, I might as well look at Oregon. CA is just horrible. These banksters are ruining it for us.
I do hope for the next bubble to burst real soon. And all those idiots who decided to pay cash in the hope of making it big and cry all they want. No one will be bailing these greedy blood sucking rats out.
All the points you mentioned in post are too good and can be very useful. I will keep it in mind; you made some good points there. I did a search on the topic and found most people will agree with your blog.
I started looking at houses last year in a different state. I hooked up with a local banker and was told I was preapproved. Kind of fishy, but every time I told him about a property, it was before I could even get things rolling. Don't know if the banker was tipping someone off or the investors moved faster than my banker. Anyway after going through about 3 or 4 houses, I decided not to tell him about the last one and guess what...I own it now and I financed it with someone else.
wasn't for investors these run down forclosed homes would just sit there and never be fixed and put back on the market
My husband and I have been searching for a home for almost a year. We are first time home owners trying to get out on our own and our from my parents roof. Thanks to the "investors" we have lost out on over a dozen offers. We don't have tens of thousands to put cash down on a home. I feel that those who are not investors should have the chance to purchase the home first. If no one offers with in an allotted time, then let the investors place their cash offers in.
We are pre-approved and have all our ducks in a row, we are loosing to the cash offers made by investors.
Turn in your Semiautomatic Rifles, Turn in your Hand Guns, Turn in your Long Guns. The POLICE / government will take care of you, "WHEN THE BAD GUYS ARE AT YOUR HOUSE."
I think that a lot of these buyers that are being outbid by investors are wanting to get houses that are either foreclosed or short sales and are priced under market. Investors have an advantage in this situation as they can pay cash, which is less of a hassle for the seller.
What is the market with traditional owners selling their houses priced at full market value? My guess would be that investors would be less interested in these homes, as they don't want to pay full market value and are looking to maximize their profit.
I think buyers see the prices of foreclosed homes and think that is the price they should have to pay, when the market price for regular sales is actually higher.
My Wife and I have been hunting for a Home for 2+ years, but every time we found a Home we loved, some invester came along and outbid us taking out our dream of owning our own.
Now that the housing market is on the recovery, our dream is moving farther and farther away faster and faster.
We both are employed full time but when the economy tanked, I had lost my employment and was left unemployed for 2.5 years, thankfully I found a new job, Worked Tirelessly to restore my credit only to find out ....it still is not good enough to compete with investors.
bank's wont look at us due to our debt to income ratio, not considering if we were able to buy a home ....our debt to income would be able to recover faster then it would be able to if we are forced to remain renting.
So invester's ...you win this battle we cannot compete with y'all, so enjoy yer properties and well ....what else i have to say is not at all polite ...so I will just end it here.