Are Real Estate Investors Excessive Competition Amid Inventory Shortages? According to new report from realtor.com®, some markets are hit hard by investor activity, while others are profitable.
Investors are exacerbating inventory shortages in 31 of the 50 largest US markets, according to the data. However, in about 19 markets, including Atlanta, Dallas, Baltimore, Los Angeles and San Francisco, they are actually helping to fill up the number of homes for sale.
“Today’s buyers are facing tough market conditions and the data shows they are not just competing with each other. With deep pockets and more flexibility, investors can be serious competition for the typical home buyer. The data now shows that investors are buying more homes than they are selling, and while they receive a lot of attention in today’s market, it is worth remembering that they can also help increase inventory, ”said Daniel Hale, chief economist at realtor.com®.
Investors usually help buyers in large metropolitan areas with low inventory levels. For example, in April, investors increased the number of homes on the market in 19 of the 50 largest metros in the United States, including Atlanta (+399 homes), Dallas (+239 homes), Baltimore (+188 homes), Los Angeles (+112 homes), and the Sun. -Francisco (+93 at home) is experiencing the biggest growth.
For many investors, the buying strategy has changed to adapt and compete with traditional buyers.
“Our investors used to make bids 15-20% below the list, but now, to tie any property, they have to be aggressive and report the full sale price along with cash and a quick close,” says Collette McDonald, CEO of Collette McDonald and Associates. … eXp Realty team in Georgia. “Annual prices in our market as a whole for the metro have grown by 7%, and in some regions – by 14%. Many investors provide complete listings with a quick check and then ask for concessions during checks. Smart listing agents do not allow this, but with the pandemic the population of agents has increased and their experience and knowledge is lacking. “
On the other hand, in small markets with large stocks, investors face more serious consequences. According to the report, investors took inventory in 31 of the largest US markets, most notably Phoenix (-429 homes), Charlotte (-287 homes), Miami (-256 homes), Tampa (-224 homes) and Chicago (-221 homes) ).
“I don’t think the real estate on the market has been on the market for more than five minutes, even if it’s real estate soon, and I usually get two to four investor offers by email,” says Nina Hollander. Broker at Coldwell Banker Realty in Charlotte, North Carolina. “It’s the main thing that makes it attractive to someone, and they can usually close it down pretty quickly.”
Investors’ attractiveness depends on several factors, Hale said, but they pay particular attention to how local house prices compare to rents.
“When house prices rise and rents become more stable, investors are more likely to sell the property and contribute,” says Hale. “On the other hand, the higher rents are compared to home prices, the more attractive the market is for investors looking to buy homes and turn them into rental properties.”
Jordan Grice contributed to this report.
Liz Dominguez is Senior Online Editor at RISMedia. Send her your real estate news ideas to firstname.lastname@example.org…