Investors Buying Up Homes
Institutional investors, seeing an opportunity and high demand, have begun snatching up as much US real estate as possible. In the fourth quarter more than 18.4% of homes, a record high, were purchased by investors according to Redfin’s housing data.
Investors are capitalizing on the opportunity to turn homes into rentals, and charging higher rents, or the opportunity to flip the homes in order to take advantage of the rising prices of homes. These investors have been defined as any business or institution that purchases residential properties or real estate in the study.
According to Invitation Homes CEO Dallas Tanner in an interview with CNBC after purchasing 1,500 homes during the last quarter, “we wish we could buy more. Demand is so large.” He would go on to say that the supply of housing is tight and that the properties that are being purchased will be held onto for the long haul to add to their expanding portfolio.
According to Redfin’s data, 80,293 homes were purchased in the fourth quarter, an increase of nearly 44% from the previous year. However investors are being limited from purchasing more by limited housing inventories.
“While record-high home prices are problematic for individual home buyers, they’re one reason why investor demand is stronger than ever,” according to Sheharyar Bokhari, Redfin economist, regarding the study’s findings. “Investors are chasing rising prices because rental payments are also skyrocketing, incentivizing investors who plan to rent out the homes they buy. The supply shortage is also an advantage for landlords, as many people who can’t find a home to buy are forced to rent instead. Plus, investors who ‘flip’ homes see potential to turn a big profit as home prices soar.”
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Source: “Real Estate Investors Are Buying a Record Share of U.S. Homes,” Redfin (Feb. 16, 2022) and “After Buying 1,500 Homes in the Last Quarter, ‘We Wish We Could Buy More,’ Says Invitation Homes CEO,” CNBC (Feb. 16, 2022)
