Frustrated Homebuyers Are Competing With Investment Funds That Are Literally Buying Up Entire Neighborhoods
Francesco Abbruzzino, The Uncensored Report, LLC
Home prices have been rising aggressively all over the nation this year, and this has caused a tremendous amount of frustration among ordinary Americans that are looking for something to buy. As I have detailed in previous articles, we have often seen ferocious bidding wars break out for the most desirable properties, and many homes end up selling for way over asking price. Unfortunately, many potential home buyers don’t even realize that they may be competing with investment funds, billionaires and wealth foreigners. Gobbling up homes is now considered to be a way to make huge returns very rapidly. Once homes are purchased, they are either flipped quickly for a large profit or they are rented out at very aggressive rates. Meanwhile, it is becoming a lot more difficult for ordinary Americans to find affordable places to live.
We witnessed a similar buying frenzy just before the housing market crashed in 2008. At this point, it seems like home prices and rents can go nowhere but up, and investors are racing to capitalize on this trend. In fact, in some of the hottest markets investors are now buying “as many as 1 in 5 houses sold”…
According to one estimate from John Burns Real Estate Consulting, as many as 1 in 5 houses sold in the nation’s top housing markets is purchased by someone who will never move in.
In the area of the country where I live, we are being absolutely swamped with advertisements from companies that want to buy homes. I have never seen anything quite like this before. John Burns says that there are “more than 200 big money companies and investment firms” that are voraciously buying up homes all over the nation right now…
“You now have permanent capital competing with a young couple trying to buy a house,” said company CEO John Burns. “That’s going to make U.S. housing permanently more expensive.”
Burns notes there are more than 200 big money companies and investment firms competing with families and first-time buyers for houses, including titans of finance J.P. Morgan Asset Management and BlackRock Inc.
In this sort of an environment, if you think that you are just going to waltz in and find a nice home for a reasonable price, you are likely in for a huge wake up call.
One real estate agent that works in the Fort Walton Beach area says that she had a client that became quite discouraged after being outbid on six different houses…
Lisa Bishop is a real estate agent in Fort Walton Beach, Florida, a small city on the Gulf Coast. Lately, she said, investment groups have been snapping up single-family homes, either to fix up and flip or to rent out for the income. A recent client, a first-time buyer, bid on six houses, only to be out-bid each time, often by cash offers.
“It’s great for sellers,” Bishop said. “It’s very discouraging for your average buyer.”
The financialization of America’s housing inventory is a very worrying trend, and it isn’t going to go away.