Home buyers are facing a tough market, with low inventory, soaring prices, and competition for homes growing exponentially. Many potential buyers are looking to wait out the market. For many who have left the market, they are hoping home prices will level off, so they can jump back into the home buying market.
Even with all that said, investors are making matters worse for buyers. Investors are contributing to the housing shortage. Here is an example: Seller A places their home on the market, and typically in the current market the home receives several offers on the first day. Seller A and their realtor comb through each offer to see which one is a good fix for seller A.
A growing percentage of those offers received will be from large and small investors looking to get in on the housing boom. Approximately about 70% of the offers received by seller A will be from investors. Of the investor offers nearly 100 percent will be cash offers.
Now on the surface this seems great for seller A. There are several issues that I will not go into at this time that can make many of those cash offers not all that appealing. But for this example, let’s say that seller A selects one of the offers by an investor.
The issue is that these investors who swoop in with large rolls of cash are buying many more homes than they are selling. Thus, limiting the number of homes that are available for single families to move in and begin their dream. The high prices that are a result of low inventory overall makes it harder for people to upgrade their home size, or difficult for a whole generation to enter the market, keeping more millennials and gen Z-ers as renters.
This of course does have an affect on the economy. Homeowners contribute to economy by purchasing appliances, lawn mowers, planting trees, adding decks and the list goes on.
Many HOA’s are reconsidering reducing the size of the rentals allowed in their subdivision, in hopes of keeping the inventory at a reasonable level to assist in managing soaring prices.
Investors of course will continue to buy up as many properties as they are allowed. Until the housing market turns around buyers will struggle, and sellers will have to make tough decision on who they sell to.
By R. Jones
