Impact of Institutional Buyers on Home Sales and Single-Family Rentals
nar.realtor
nar.realtor
Like in much of the US, home prices here have risen dramatically in the last 2 years. The report speculates that institutional purchases are not the primary cause due to a few factors outlined on page 30, including the fact that institutional buyers are not paying much of a premium over other buyers.
I think this is a little misleading. Institutional buyers still offer all cash or offer to purchase as-is, which eases things along for the seller even if there is not a price advantage. This will force other buyers to purchase at a more attractive price in order to get the property. Anecdotally, all my friends who have bought recently have had to pay over asking to compete with all-cash offers.
However, blaming institutional buyers for all of the price increase is a bit of a red herring. Institutional buyers existed before the huge housing inflation of the past few years. So, what changed? Low rates, COVID / remote work making single family homes more attractive, and the cost of construction increasing were things that changed drastically in the past few years. Not to mention strict zoning laws making new building more challenging in some markets. I don't think that's a problem locally for me, but it is a factor in places like SF.
Personally, I think that prices are going to come crashing down soon, just like what's happening to the stock market. The cost of servicing the mortgage on my home would be 75% higher than when I bought a few years ago if I bought today with 20% down. People are not making 75% or even 20% higher wages than just a few years ago. It's just unsustainable: even the investors need buyers or renters at the current inflated market prices to make whole on their purchases.
[0] https://archive.ph/SzDPv or https://www.expressnews.com/sa-inc/article/bexar-county-home... (paywall)