Wall Street and institutional investors account for 70 percent of home sales in some Florida markets, raising doubts about the state’s housing recovery, the Washington Post reported.
Investors are helping to revive moribund markets as well as the prospect of another Wall-Street-fueled bubble, the Washington Post reported. A surge in demand partly explains rising home prices in South Florida, despite high unemployment rates and few lenders issuing mortgages.
Buying up distressed properties and carving them up into rental units makes sense in a context of declining rates of homeownership in the U.S. The homeownership rate, which peaked at 69.2 percent in 2004, fell to 65.4 percent at the end of 2012, the Post reported, citing the U.S. Census.
With cash, clout and a growing appetite for single-family homes, investors may be shutting out would-be homeowners from the best bargains in a decade, according to the Post.
“The investors are making it hard for a regular homeowner to buy a property,” said Robert Russotto, a broker with Better Homes and Gardens Real Estate in Fort Lauderdale. “They are getting outbid by people with cash.” Russotto told the paper that out of the 20 home sale contracts he is the process of completing, 17 of the buyers are major investors. [Washington Post] –Emily Schmall