Investors bought a record share of homes in 2021. See where.

[neverfstop]

www.washingtonpost.com/business/interactive/2022/housing-market-investors/?itid=hp_temp2-subfavs


Last year, investors bought nearly one in seven homes sold in America’s top metropolitan areas, the most in at least two decades, according to the realty company Redfin.



Those purchases come at a time when would-be buyers across the country are seeing wildly escalating prices, raising the question of what impact investors are having on prices for everyone else. Investors were even more aggressive in the final three months of the year, buying 15 percent of all homes that sold in the 40 markets.

--------------------

I know that many people are taught to buy their house as a mechanism for building wealth, as well as investing in rental property.  However, I'm amazed at all the investors and also foreign buyers who are using the US real estate market to generate wealth while "normal" people can't even afford housing, especially in the last 5-10 years. I'm starting to favor some type of "investor tax" on houses that aren't owner occupied to help level the playing field.  I don't want to tank the RE market, but I think we need to discuss reigning it it and figuring out a more sustainable future where all cash offers from investors or foreign visitors aren't driving out people who need to live in a community.

[Deleted]

Many neighborhood HOAs are imposing limits on renting out properties — requiring that an owner wait until two years after initial purchase before they rent out, and limiting neighborhoods to only a certain percentage of rental properties (say, no more than 30% of properties in the neighborhood can be rentals).

[thejen626]

I read an article recently about how it’s not actual people investors that are buying, but corporations. So the corporations buy the homes and then raise the rent prices so high to price gauge and keep the middle class as poor as possible.

Just UGH 🤬

[goldengirlz]

Apr 22, 2022 20:20:36 GMT -5 @villainv said:

Many neighborhood HOAs are imposing limits on renting out properties — requiring that an owner wait until two years after initial purchase before they rent out, and limiting neighborhoods to only a certain percentage of rental properties (say, no more than 30% of properties in the neighborhood can be rentals).

Unfortunately, this won’t help in inner-cities, where a lot of this activity has been concentrated in historically Black zip codes. (HOAs generally haven’t been the solution when you think: how can we help marginalized communities?)

The maps are really striking. I would have assumed investor activity would be hot across the Bay Area, but really it’s just the rapidly gentrifying, formerly Hispanic neighborhoods near Palo Alto.

[goldengirlz]

Apr 22, 2022 20:35:55 GMT -5 thejen626 said:

I read an article recently about how it’s not actual people investors that are buying, but corporations. So the corporations buy the homes and then raise the rent prices so high to price gauge and keep the middle class as poor as possible.

Just UGH 🤬

Yep. The book Golden Gates talks about this. Not just houses but entire apartment complexes. And then the people who’ve lived there for decades — largely people who hold lower-wage jobs — become subject to market-rate rents after these investors slap on some high-end finishes and upgrade the appliances.

[plutosmoon]

In my area investors are scooping them up, slapping together a quick flip, and renting them out as vacation rentals. The practice is driving out year round residents, there is a shortage of affordable year round housing. Buying a house is rapidly becoming unaffordable for so many in my community and now they have no where to rent because tourists want to airbnb instead of supporting of locally owned hotels and bed and breakfasts. On your next vacation, please consider the impact of your choice of accommodations on the local community. Airbnbs have killed our housing stock. My city has 15k people, as short as 40 years ago there were 40k, which means all those people were housed somewhere, so why aren't there places for people to live now? Sure, we love our tourists, they keep our vibrant summer economy turning, but where will all our service people live if all their homes are turned into vacation rentals?

[rubytue]

Apr 22, 2022 20:13:23 GMT -5 neverfstop said:

. I'm starting to favor some type of "investor tax" on houses that aren't owner occupied to help level the playing field.  I don't want to tank the RE market, but I think we need to discuss reigning it it and figuring out a more sustainable future where all cash offers from investors or foreign visitors aren't driving out people who need to live in a community.

It’s probably not what you are talking about, but in some states, non-owner occupied homes do pay more property taxes. Here in Maryland, at least, you get a homestead credit if you live in the house. And you can only have one at a time. In fact, I can’t apply it to this house until my previous one (sold in august) gets [something]. I don’t quite follow what is up, just when I tried to apply my homestead credit in this county, it spit back something about already having one. 

[savan]

This does not surprise me. My zip code is listed as 11% on that map. The house next door to us has been a rental for over a decade. It was owned by an individual landlord. He sold last year and it was bought by a corporate investor who appears to be renting it out to multiple people. We have no HOA and long term renting is commonplace due to the high home prices.

[redheadbaker]

We saw a twin listed In the tiny borough we want to live (where we currently rent), decent condition, had all the major features we wanted.

It was purchased before we had a chance to see it, bought for cash, offered more than asking, waived contingencies and inspection. Even if it wasn’t an investment company (we think it was someone looking to flip or rent it out), how are middle income families supposed to compete with that?

[bugandbibs]

48% of the homes in my zip code according to this map. 48%! I knew things were bad, but that is insane. Another reason we are never moving. Housing prices are unreasonable.

[carmenere]

I didn’t see the map because paywall. We are getting ready to put our house on the market and Our realtor said investors account for something like 60% of sales in metro Atlanta. Which presents an ethical dilemma because I would strongly prefer to sell to an owner-occupant, but I think we’ll have to take the highest offer so we can afford to make a competitive offer on a new home that meets our accessibility needs.

[sakoro]

Apr 22, 2022 20:38:26 GMT -5 goldengirlz said:

Apr 22, 2022 20:20:36 GMT -5 @villainv said:

Many neighborhood HOAs are imposing limits on renting out properties — requiring that an owner wait until two years after initial purchase before they rent out, and limiting neighborhoods to only a certain percentage of rental properties (say, no more than 30% of properties in the neighborhood can be rentals).

Unfortunately, this won’t help in inner-cities, where a lot of this activity has been concentrated in historically Black zip codes. (HOAs generally haven’t been the solution when you think: how can we help marginalized communities?)

The maps are really striking. I would have assumed investor activity would be hot across the Bay Area, but really it’s just the rapidly gentrifying, formerly Hispanic neighborhoods near Palo Alto.

Most of coastal CA is below average— maybe because investors have already bought up all the “affordable” middle class housing in the 2010s. In my county they appear to be buying up property in a remote zip code near the Mexican border. Maybe anticipating some sort of development coming in?

[Jalapeñomel]

Apr 22, 2022 23:16:45 GMT -5 carmenere said:

I didn’t see the map because paywall. We are getting ready to put our house on the market and Our realtor said investors account for something like 60% of sales in metro Atlanta. Which presents an ethical dilemma because I would strongly prefer to sell to an owner-occupant, but I think we’ll have to take the highest offer so we can afford to make a competitive offer on a new home that meets our accessibility needs.

The investors that bid on our house weren’t the highest offer, but they were all cash offers.

[notsopicky]

I got bicycles and electricity right on the dot. I was surprised to see that some of the items cost more in 2020.

I have been asking this question often in the last year or two: How is the current upward trend of housing prices sustainable for low & mid SES? Short answer, it isn't. A PP asked upthread: where do the people go? The answer to that is--further out. Further from their job, their schools, their communities. And that doesn't support the whole idea of a community in the first place.

In the area where I work (and in which I used to live), there is some significant development coming. I am very concerned about where the people we serve at my work are going to go. The rents & real estate prices are going to go up in price, I fear very quickly, and those folks are going to be displaced.

[sent]

Not as much investor activity going on in the Midatlantic and Northeast states according to that map. Where I am, builders buy the $300K homes, knock them down, and put up something for sale at $800K+. Fewer investors probably buy the $300K home, fix it up and rent it out. High property taxes doesn't leave much profit to do that, like probably $7K+ on the $300K house.

[loira]

Apr 22, 2022 21:18:15 GMT -5 rubytue said:

Apr 22, 2022 20:13:23 GMT -5 neverfstop said:

. I'm starting to favor some type of "investor tax" on houses that aren't owner occupied to help level the playing field.  I don't want to tank the RE market, but I think we need to discuss reigning it it and figuring out a more sustainable future where all cash offers from investors or foreign visitors aren't driving out people who need to live in a community.

It’s probably not what you are talking about, but in some states, non-owner occupied homes do pay more property taxes. Here in Maryland, at least, you get a homestead credit if you live in the house. And you can only have one at a time. In fact, I can’t apply it to this house until my previous one (sold in august) gets [something]. I don’t quite follow what is up, just when I tried to apply my homestead credit in this county, it spit back something about already having one. 

In my province we have a speculation tax - this was brought in about 2 years ago. Basically, homeowners who prove their property is their primary residence are not subject to it (you have to do a declaration every year). The first year it was brought in a TON of investors complained that they "hadn't received the notice". Um yeah, you didn't receive it because you don't live there and your $1.5M condo in Vancouver is just sitting empty!

[quesyrah]

I sold my parents house last year. It’s in a HCOL suburb of Los Angeles.

Of the 8 offers we got, 3 were investors and 4 were all cash (the 3 investors and an individual). The investors were not our highest offers.

In our case, all of the individuals/couples that offered wrote letters. The investors did not.

[Velar Fricative]

Apr 23, 2022 8:06:27 GMT -5 sent said:

Not as much investor activity going on in the Midatlantic and Northeast states according to that map. Where I am, builders buy the $300K homes, knock them down, and put up something for sale at $800K+. Fewer investors probably buy the $300K home, fix it up and rent it out. High property taxes doesn't leave much profit to do that, like probably $7K+ on the $300K house.

And when they're lucky, around here they can knock down the one house sitting on a large property and build two 2-family homes. In fact, the old house around the corner from me sold for over $700k and was just knocked down yesterday. And it didn't take long for that to happen because I literally walked the half a mile to the supermarket while it was still standing yesterday, and by the time I walked home after shopping it was gone lol. Public records show there will be two 2-family homes built on the property, which based on comps will almost certainly go for close to $1 million each and will be rented out to four different tenants. Here though, the investors are generally individuals or small LLCs.

But overall, my ZIP only has 4% of sales purchased by investors, because we're the only borough with a majority of residents who own their homes anyway so while the rental market here is picking up, generally people don't move here to rent - they move here to buy since they've been priced out of every other part of NYC. However, the parts of the borough plus the rest of NYC that do have more investors buying are indeed in majority Black/Hispanic neighborhoods. The Bronx's numbers overall are the highest. 

I don't want the rental market to become worse than it already is for anyone who needs or wants to rent, which is basically what HOA restrictions and/or financially punitive measures towards investors typically do. So I don't know what the solution is, honestly. The housing situation is ridiculous.

[sent]

Velar Fricative, yes that too. Knock down 1, put up 3. I've seen this play out 3 times now in my town and I've only lived here for 6 years.

[livinitup]

The map for NY - Nassau and Suffolk counties is dark brown for classic minority communities and rural communities (in seasonal beach areas) to a T. They are so screwed.

[wawa]

Apr 23, 2022 10:54:54 GMT -5 Velar Fricative said:

Apr 23, 2022 8:06:27 GMT -5 sent said:

Not as much investor activity going on in the Midatlantic and Northeast states according to that map. Where I am, builders buy the $300K homes, knock them down, and put up something for sale at $800K+. Fewer investors probably buy the $300K home, fix it up and rent it out. High property taxes doesn't leave much profit to do that, like probably $7K+ on the $300K house.

And when they're lucky, around here they can knock down the one house sitting on a large property and build two 2-family homes. In fact, the old house around the corner from me sold for over $700k and was just knocked down yesterday. And it didn't take long for that to happen because I literally walked the half a mile to the supermarket while it was still standing yesterday, and by the time I walked home after shopping it was gone lol. Public records show there will be two 2-family homes built on the property, which based on comps will almost certainly go for close to $1 million each and will be rented out to four different tenants. Here though, the investors are generally individuals or small LLCs.

But overall, my ZIP only has 4% of sales purchased by investors, because we're the only borough with a majority of residents who own their homes anyway so while the rental market here is picking up, generally people don't move here to rent - they move here to buy since they've been priced out of every other part of NYC. However, the parts of the borough plus the rest of NYC that do have more investors buying are indeed in majority Black/Hispanic neighborhoods. The Bronx's numbers overall are the highest. 

I don't want the rental market to become worse than it already is for anyone who needs or wants to rent, which is basically what HOA restrictions and/or financially punitive measures towards investors typically do. So I don't know what the solution is, honestly. The housing situation is ridiculous.

At least the -1/+4 model is increasing the overall quantity of housing stock...so there's that. I'd rather see than than the Maryland DC suburb model of knocking down a modest 3 br single family home to build a 1.5M ugly ass monster of a single family home.

[Velar Fricative]

wawa, ordinarily I’d agree with you but it doesn’t seem to be helping the affordable housing situation when they’re still selling to individuals for $$$ and then the rents are super high because the house is new and fancy. I guess it does help somehow though.

[wawa]

Apr 24, 2022 17:52:48 GMT -5 Velar Fricative said:

wawa, ordinarily I’d agree with you but it doesn’t seem to be helping the affordable housing situation when they’re still selling to individuals for $$$ and then the rents are super high because the house is new and fancy. I guess it does help somehow though.

Yeah, in the short term/small picture it doesn't help at all. But to the extent that some of the price pressure is just pure scarcity...it certainly doesn't hurt. A colleague did a local non-scientfic study of prices vs. supply with the "luxury apartments/condo" construction dominating everything and found that more "luxury" new units did cause some downward adjustment on the older units. But it only happens when they're actually building kind of a lot so they're staying ahead of demand even with investors and all that. And only is actually a good thing in places that should have higher density (i.e. walkable places with transit)

[picksthemusic]

There's an area north of us that is over 30% investor purchased. It's a growing area, since most housing surrounding Seattle/Everett/Eastside isn't affordable for most of the middle class.

We were lucky to buy when we did at the price we did (in 2014), and now our home is super inflated in price. But even if we sold, we wouldn't be able to afford a new home anyway. So here we sit. Our plan is 5 more years in this house and then we'll see what happens. DH is dreaming of buying land and building, but I'm not sure how realistic that is for us. Some major changes have to happen in the market for it to be feasible.

[neverfstop]

Why can't we just raise corporate taxes? They are at record lows...
I do think we need to do something to stop huge investors from wringing out all the profits of a real estate market while leaving none or very little ways for normal homebuyers to build generational wealth and stay in the middle class.

[aecep]

PDQ

This has me so worried. We are fortunate not to being an area where we are being pushed out due to gentrification, so i feel a bit privileged to even complain. However, I am planning to serve H with divorce papers. If the lawyers insist that I have to sell the house, I'm screwed in this market. Investors are buying left and right. You have to offer well over asking, extra earnest money, and you're competing with cash offers. And you have to decide FAST.

@@@

I'm hoping H will agree that he gets half of the equity we currently have in the house plus half of the profit (less realtor fees) when I sell it after the kids graduate from HS. I'd like to retain the residence until graduation for their stability.