Young house buyers are finding a lot of competition, and much of the competition is not from first-time buyers. Home investors are dominating the market for the cheap price houses in some cities and effectively edging out entry-level buyers that are looking for affordable homes.
The supply of homes for sale is at the lowest in U.S as it has ever been in the last 30 years. The shortage of the housing is more severe with the houses that cost the lowest and those that are middle priced. In Dallas-Fort Worth, houses that are on sale in the local listing at a price $240,000 are less than 3000 in total. This is a price that is lower than the average cost of a home in the area.
The price range offered is attractive to many renters that are interested in buying a home. Most of the investors pay cash for these houses and turn them into rental properties. According to a ATTOM Data Solutions’s economist Daren Blomquist, the investors account for 33% of all single family sales in the year 2016 which is the highest number that has ever been observed. This phenomenon explains why there is an upsurge in the single-family rentals.
Blomquist said to a journalist during a National Association of real Estate Editors conference held in Denver that investors companies are the ones dominating the rental housing market immediately after the housing crisis. In the year 2012, the homes bought by investor companies accounted for 8 percent of all sales, but in the year 2016, then figure dropped to 3 percent. He added that the big companies have been faced out the markets in places like Dallas and Dallas. Smaller investors are giving giants like hedge fund homebuyers and Wall Street a run for their money.
According to Blomquist, investors are eyeing starter homes, and the bulk of their purchases- 61%- consists of homes that are around 2000 square feet and below. 19 million single-family houses in America now belong to investors, and only 3 percent of the houses belong to investors who have 100 properties or more. David Hicks from HomeVestor of Dallas said that though big institutional homebuyers have been having a lot of publicity lately, most of the properties are being sold to small and local investors who are interested in a second income. He added that 10.8 million houses are owned by investors with 5 of less property. This has redefined the name investor which now means someone who buys a few houses in their neighborhood.
According to HomeUnion’s Steve Hovland, most of the investors are moving money away from wealthy coasts and investing in areas like Austin, Parte of Florida and Georgia, Dallas, Raleigh-Durham, and Charlotte. He further said that the great deals are still available, but they are not easy to get. Whether you want to invest or just buy a starter home, then there are few options for you.
Vivas observed that 2017 is the worst year for real estate companies because the supply of homes is the lowest it has been for the last twenty years. It is reported that there were about 200000 fewer homes for sale on the market in the US. Homes at the lowest price range are the rarest. The lowest bracket homes are also the ones that have the highest demand.
All real estate experts agree that these issues in the real estate sector were brought about by the influx of investors.