There has been a lot of news lately about investment firms, especially the big ones like BlackRock, who are going into communities and buying all the properties. The domestic market has been explosive over the past year, with mortgage rates at historic lows and the pandemic prompting many people to want to change their living environment all at once.
For those with middle and upper incomes, their incomes were not significantly affected by the pandemic, and the real change for them was that they gained mobility and perhaps could leave the big cities and continue to work at distance for their employer.
This drove the prices up a bit and led to bidding wars across the country.
There is also another factor at play.
Wall Street buys family homes, like BlackRock, but other companies are doing it as well.
Pension funds, Wall Street banks and investment firms buy family properties not only in the United States but also in Europe.
There are a lot of them, but part of that is because they want alternative real estate investments to their commercial and commercial properties, which may take a long time to recover from the pandemic, if ever.
With remote working appearing to be here to stay, however, the pandemic and the ripple effects could keep demand for suburban family homes high.
Another factor in the mix with this current situation is that Millennials and younger Americans are more interested in renting than buying a home. They might not want the commitment to one location, for example, or the maintenance that comes with homeownership.
Home purchases from investors grew 2.7% year-on-year in the first quarter of 2021.
Investors bought about one in seven homes in the first quarter of this year.
For single-family homes purchased by investors, there was a 4.8% year-over-year increase in the first quarter. Investors also retain the largest market share in multi-family properties, having purchased nearly 26% of these in the first quarter in the United States.
Investors see this as a good buying opportunity as there is a growing housing shortage across the country. With a limited inventory, many families opt instead to rent.
Investors have the cash on hand to buy the homes quickly and easily, and then they can rent them out to people or families who can’t find a home, or who may not be able to afford it.
For these investors, real estate is one of the few safe havens in an incredibly uncertain world.
The unfortunate effects are however felt by people of the lower and middle classes.
First, many people are reluctant to sell their home now because they fear they won’t afford another, which means additional limitations on inventory. People with low incomes also tended to lose their jobs more often during the pandemic or to see declines in income that deprive them of property.
Investors buy everything, including cheap homes. One in five low-cost homes sold in the United States in the first quarter were bought by an investor.
Cities where investors have shown particular interest include Miami, where investor buys account for nearly 24% of deals, Atlanta, Jacksonville and Charlotte.
Young families and individuals compete with hundreds of companies, including not only names like BlackRock, but also tech startups, rental platforms, and fund managers. There are bidding wars at all levels.
Unless something changes, this is likely to have serious ramifications in the years to come, as homeownership is the primary vehicle for building wealth.
When the purchase price of a home is excluded and forced to rent, your landlord can potentially be a large investment firm as well. This means that there may be weaker guards in place and you don’t have the comfort you get with a small landlord when it comes to maintenance and rent stability.
Anyone can guess how it ends, but there is undoubtedly a strong pressure across the country as the lower, middle and even upper classes try to buy houses and find that it is not possible to buy houses. them right now.
Written by Ashley Sutphin for Realty Times at www.RealtyTimes.com Copyright © 2021 Realty Times All rights reserved.