Competition with Realty Investors adds to First Time Homebuyers Woes
Inflation, soaring interest and mortgage rates, and lack of inventory were already making the life of first-time homebuyers difficult. But now, there’s an additional factor adding to these difficulties, realty investors who are more likely to be cash-buyers and who they have to compete against.
A Realtor.com survey finds that in April, investors bought a near-record-high share of homes, scooping up 9.5% of homes sold during the month, up 2.8 percentage points from the same time last year, but slightly lower than the 9.7% peak share in February.
In addition, in April, investor purchases were up 31% over the previous year and 64% from the same time in 2019, the survey notes.
“Today’s buyers are facing a tough market and data shows they aren’t just competing with each other. With deep pockets and more flexibility, investors can be daunting competition for the typical homebuyer. Right now, data shows investors are buying more homes than they are selling, and while they get a lot of attention in today’s market, it’s worth remembering that they can also contribute to inventory levels,” Realtor.com Chief Economist Danielle Hale, said in a press release.
Realtor.com also found that investor purchase activity is highest in the South, with Charlotte, North Carolina, seeing the greatest growth in investor interest. Indeed, in Charlotte-Concord-Gastonia, in the Carolinas, a whopping 20% of homes sold in the 12 months ending April 2022 were purchased by investors, according to the survey.
Branson, Missouri, with 19.5%, Birmingham-Hoover, Alabama, with 18.9%; Summit Park, Utah, with 18.6% and Memphis, Tennessee, with 18.5% rounded out the top five metros seeing the most investor activity during this time.
There is a silver lining for some homebuyers, however, as the survey finds that in 19 markets – including Atlanta Georgia, Dallas, Texas, Baltimore, Maryland, Los Angeles and San Francisco, California – investors are contributing inventory, by replenishing the number of homes for sale.
“High home prices, slower rent growth, and uncertainty over the future of work in these markets are likely causing investors to reevaluate their property portfolios in these areas,” Hale said in the release. “And with homes still selling quickly, even in these metros, an investor deciding to sell can look forward to being able to reposition their dollars elsewhere in a very short period of time.”
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