The Real Deal National

Investors, speculators plow into US housing market: report

First-time home buyers are struggling to compete with bigger players, a new report shows
June 21, 2019 02:57PM

First-time home buyers are struggling to compete with deep-pocketed institutional investors. (Credit: iStock)

First-time home buyers are struggling to compete with deep-pocketed institutional investors. (Credit: iStock)

More than one of 10 homes sold in the U.S. last year went to investors and speculators. And in the bottom third of the market, the proportion was one out of five.

The involvement of private-equity firms, speculators and other investors in the U.S. housing market has hit all-time highs, the Wall Street Journal reported, citing data released by CoreLogic this week.

Housing markets saw a wave of institutional investment following the financial crisis, with firms like Blackstone and Starwood Capital Group scooping up thousands of foreclosed properties across the country.

Investor interest appeared to dip after a 2013 peak as markets began to recover, but has since rebounded. Economists attribute this sustained investor appetite to strong rental demand, online home-buying technology and low interest rates.

Though institutional investment was credited with stabilizing markets in 2011 and 2012 by making all-cash buys amid amid a mortgage credit slowdown, millennials and other first-time home buyers now find themselves struggling to compete with their deep pockets.

In some cases, people in cities like New York and San Francisco who have been priced out of local markets are choosing to pick up investment properties in places like Georgia and Tennessee — sometimes without ever having been to those states.

The top market for investor purchases in 2018 was Detroit, where investors bought two out of five lower-priced homes, followed by Philadelphia, where nearly half of starter homes went to investors. [WSJ] — Kevin Sun